MoneyGram 2011 Annual Report Download - page 5

Table of Contents
Concurrently with entering into the Recapitalization Agreement, Worldwide and the Company entered into a consent agreement, or the Consent Agreement,
with certain affiliates of Goldman Sachs, or the GS Note Holders, who are holders of the Notes. Pursuant to the Consent Agreement, the parties thereto
entered into a supplemental indenture to the indenture governing the Notes that amended the indenture in order to permit the 2011 Recapitalization. In
addition, the Company entered into a new senior secured credit facility, or the 2011 Credit Facility, comprised of a $150 million, five−year revolver and a
$390 million six−and−a−half−year term loan, which refinanced the Company’s existing senior secured credit facility and provided the funding for the 2011
Recapitalization.
On November 14, 2011, the Company filed a certificate of amendment to its Amended and Restated Certificate of Incorporation to effect a reverse stock
split of the Company’s common stock at a reverse stock split ratio of 1−for−8 and to decrease the number of authorized shares of common stock from
1,300,000,000 to 162,500,000. As the par value of common stock was not affected, $3.5 million was transferred from common stock to additional paid in
capital. In connection with the reverse stock split, the conversion ratio of the D Stock to common stock decreased from 1,000 to 125. All share and per share
amounts have been retroactively adjusted to reflect the stock split with the exception of the Company’s treasury stock, which was not a part of the reverse
stock split.
In November and December 2011, the Company completed a secondary offering pursuant to which the Investors sold an aggregate of 10,237,524 shares in
an underwritten offering. In connection with the secondary offering, 63,950 shares of D Stock were converted to 7,993,762 shares of common stock. The
Company did not receive proceeds from the offering.
In connection with the secondary offering, the Company exercised an option to redeem $175.0 million of its Second Lien Notes. The redemption was
completed through the issuance of a $150.0 million incremental term loan under the 2011 Credit Agreement, with the remaining balance paid from cash and
cash equivalents. In connection with the redemption, the Company incurred a prepayment penalty of $23.2 million.
Our Business
Our global money transfer and bill payment services are our primary revenue drivers. Money transfers are transfers of funds between consumers from one
location to another. The sender pays a fee based on the transfer amount and the destination location. The designated recipient may receive the transferred
funds at any agent location. In select countries, the designated recipient may also receive the transferred funds via a deposit to the recipient’s bank account,
mobile phone account or prepaid card. We typically pay both our “send” and “receive” agents a commission for the transaction.
We provide money transfer services through our worldwide network of agents and through a limited number of Company−owned retail locations in the
United States and Western Europe. We also offer our money transfer services through the Internet, agent websites, mobile phone, kiosks, ATMs, receive
cards and direct−to−bank account products in various markets around the world.
Our primary bill payment service offering is our ExpressPayment® service, which we offer at all of our money transfer agent locations in the United States
and at certain agent locations in select Caribbean countries. Through our ExpressPayment service, a consumer can pay cash for bills at an agent location and
obtain same−day notification of payment to the consumer’s account with its creditor, also referred to as a biller. Our consumers can also use our
ExpressPayment service to load and reload prepaid debit cards. Our ExpressPayment bill payment service is also available for payments to select billers via
the Internet at www.moneygram.com.
We also derive revenue through our money order and official check services. We provide money orders through retail and financial institutions located
throughout the United States and Puerto Rico, and we provide official check outsourcing services to financial institutions across the United States.
Consumers use our money orders to make bill payments or in lieu of cash or personal checks. Official checks are used by consumers where a payee requires
a check drawn on a bank and by financial institutions to pay their own obligations.
During 2011, 2010 and 2009, our 10 largest agents accounted for 45 percent, 50 percent and 48 percent, respectively, of our total company fee and
investment revenue and 48 percent, 54 percent and 53 percent,
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