MoneyGram 2010 Annual Report Download - page 125

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The deferred compensation plans are unfunded and unsecured, and the Company is not required to physically segregate any assets in
connection with the deferred accounts. The Company has rabbi trusts associated with each deferred compensation plan which are funded
through voluntary contributions by the Company. At December 31, 2010 and 2009, the Company had a liability related to the deferred
compensation plans of $3.8 million and $5.0 million, respectively, recorded in the "Accounts payable and other liabilities" component in
the Consolidated Balance Sheets. The rabbi trusts had a market value of $10.7 million and $10.0 million at December 31, 2010 and 2009,
respectively, recorded in "Other assets" in the Consolidated Balance Sheets.
Note 11 — Mezzanine Equity
Preferred Stock — In connection with the 2008 Recapitalization, the Company issued 495,000 shares of B Stock and 265,000 shares of
B-1 Stock to the Investors for a purchase price of $495.0 million and $265.0 million, respectively. As a result of the issuance of the
Series B Stock, the Investors had an equity interest of approximately 79 percent on March 25, 2008. With the accrual of dividends, the
Investors had an equity interest of approximately 84 percent and 82 percent on December 31, 2010 and 2009, respectively. In addition,
the Company capitalized $107.5 million of transaction costs, including $7.5 million paid through the issuance of 7,500 shares of B-1
Stock to Goldman Sachs. The B Stock is convertible into shares of common stock of the Company at a price of $2.50 per share, subject to
adjustment. The B-1 Stock is convertible into B Stock by any stockholder other than Goldman Sachs. While held by Goldman Sachs, the
B-1 Stock is convertible into Series D Participating Convertible Preferred Stock ("Series D Stock").
The Series B Stock pays a cash dividend of 10 percent. At the Company's option, dividends may be accrued through March 25, 2013 at a
rate of 12.5 percent in lieu of paying a cash dividend. If the Company is unable to pay the dividends in cash after March 25, 2013,
dividends will accrue at a rate of 15 percent. The Company anticipates that it will accrue dividends on the Series B Stock for at least the
next 12 months. While no dividends have been declared as of December 31, 2010, the Company has accrued dividends through a charge
to "Additional paid-in capital" to the extent available and through a charge to "Retained loss" for the remainder as accumulated and
unpaid dividends are included in the redemption price of the Series B Stock. The Series B Stock also participates in any dividends
declared on the common stock on an as-converted basis.
The Series B Stock may be redeemed at the option of the Company after March 25, 2013 if the average market price of its common stock
exceeds $15.00, subject to adjustment, during a period of thirty consecutive trading days. The Series B Stock will be redeemable at the
option of the Investors after March 25, 2018 or upon a change of control. As of December 31, 2010, the Company believes that it is not
probable that the Series B Stock will become redeemable as (a) the contingencies for the change of control redemption option and the
optional redemption by the Company are not met, and (b) these two contingencies may occur prior to the ability of the Investors to
exercise their option to redeem. The B Stock votes as a class with the common stock of the Company and has a number of votes equal to
(i) the number of shares of common stock issuable if all outstanding shares of B Stock were converted plus (ii) the number of shares of
common stock issuable if all outstanding shares of B-1 Stock were converted into B Stock and subsequently converted into common
stock.
F-40