MoneyGram 2009 Annual Report Download - page 45

Table of Contents
We continue to see a trend among state, federal and international regulators toward enhanced scrutiny of anti-money laundering
compliance, as well as consumer fraud prevention and education. In addition, we created a new licensed entity in connection with the
November 2009 adoption of the European Union's Payment Services Directive, which provides for a new licensing and regulatory
framework for our services in the European Union. As we continue to add staff and enhance our technology systems to meet regulatory
trends, our operating expenses for compliance will likely increase.
Acquisition and Disposal Activity
Acquisition and disposal activity is set forth in Note 4 — Acquisition and Disposal Activity of the Notes to Consolidated Financial
Statements.
Recapitalization
On March 25, 2008, we completed a series of transactions pursuant to which we received an infusion of $1.5 billion of gross equity and
debt capital to support the long-term needs of the business and provide necessary capital due to the investment portfolio losses in late
2007 and the first quarter of 2008 (the "recapitalization"). The net proceeds of the recapitalization were used to invest in cash equivalents
to supplement our unrestricted assets and to repay $100.0 million on our revolving credit facility. Following are the key terms of the
equity and debt capital issued.
Equity Capital — The equity component of the recapitalization consisted of the private placement of 760,000 shares, in aggregate, of B
Stock and shares of non-voting B-1 Stock to affiliates of THL and affiliates of Goldman Sachs, respectively, for an aggregate purchase
price of $760.0 million. After the issuance of the Series B Stock, the Investors had an equity interest of approximately 79 percent; this
equity interest has increased to 82 percent as of December 31, 2009 from the accrual of dividends during the year. In connection with the
recapitalization, we also paid Goldman Sachs an investment banking advisory fee equal to $7.5 million in the form of 7,500 shares of B-1
Stock. See Note 12 — Mezzanine Equity of the Notes to the Consolidated Financial Statements for further information regarding the
Series B Stock.
Debt Capital — Our wholly owned subsidiary, Worldwide, entered into a Senior Facility of $600.0 million with various lenders and
JPMorgan as Administrative Agent for the lenders. At the time of the recapitalization, the Senior Facility was composed of a
$100.0 million tranche A term loan ("Tranche A"), a $250.0 million tranche B term loan ("Tranche B") and a $250.0 million revolving
credit facility. Tranche B was issued at a discount of 93.5 percent, for a $16.3 million discount. Worldwide also issued $500.0 million of
Notes maturing in March 2018 to Goldman Sachs. See Note 10 — Debt of the Notes to the Consolidated Financial Statements for further
information regarding the Senior Facility and the Notes.
LIQUIDITY AND CAPITAL RESOURCES
We have various resources available to us for purposes of managing liquidity and capital needs, including our cash, cash equivalents,
investments, credit facilities and letters of credit. We refer to our cash equivalents, trading investments and related put options and
available-for-sale investments collectively as our "investment portfolio." We utilize the assets in excess of payment service obligations
measure shown below in various liquidity and capital assessments. While assets in excess of payment service obligations, as defined, is a
capital measure, it also serves as the foundation for various liquidity analyses.
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