MoneyGram 2013 Annual Report Download - page 6

Table of Contents
Partners, L.P., or THL, and affiliates of Goldman, Sachs & Co., or Goldman Sachs, and collectively with THL, the Investors, in a private
placement of Series B Participating Convertible Preferred Stock of the Company, or the B Stock, and Series B-
1 Participating Convertible
Preferred Stock of the Company, or the B-
1 Stock, and collectively with the B Stock, the Series B Stock, for an aggregate purchase price of
$760.0 million. We also paid Goldman Sachs an investment banking advisory fee equal to $7.5 million in the form of shares of the B-1 Stock.
In May 2011, we completed a second recapitalization, referred to herein as the 2011 Recapitalization. Pursuant to the 2011 Recapitalization,
(i) THL, as the holder of all of the B Stock, converted all of the shares of B Stock into shares of our common stock in accordance with the
Certificate of Designations, Preferences and Rights of Series B Participating Convertible Preferred Stock of MoneyGram International, Inc.,
(ii) Goldman Sachs, as the holder of all of the B-1 Stock, converted all of the shares of B-
1 Stock into shares of Series D Participating
Convertible Preferred Stock of the Company, or D Stock, in accordance with the Certificate of Designations, Preferences and Rights of Series B-
1 Participating Convertible Preferred Stock of MoneyGram International, Inc., and (iii) THL received approximately 3.5 million additional
shares of our common stock and $140.8 million in cash, and Goldman Sachs received approximately 15,503 additional shares of D Stock and
$77.5 million in cash. The 2011 Recapitalization was approved unanimously by our board of directors following the recommendation of a
special committee comprising independent and disinterested members of our board of directors.
On November 14, 2011, we filed a certificate of amendment to our Amended and Restated Certificate of Incorporation to effect a reverse stock
split of our 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 1 to 125 to 1. All share and per share amounts have been retroactively adjusted to reflect the stock split with the exception of our treasury
stock, which was not a part of the reverse stock split.
2013 Events
2013 Credit Agreement and Note Repurchase —
On March 28, 2013, the Company entered into an Amended and Restated Credit Agreement
with Bank of America, N.A., as administrative agent, or BOA, and the other financial institutions party thereto, as lenders, referred to herein as
the 2013 Credit Agreement. The 2013 Credit Agreement provides for (i) a senior secured five-year
revolving credit facility that may be used for
revolving credit loans, swingline loans and letters of credit up to an aggregate principal amount of $125.0 million and (ii) a senior secured seven-
year
term loan facility up to an aggregate principal amount of $850.0 million .
In connection with the Company's entry into the 2013 Credit Agreement, the Company repaid in full all outstanding indebtedness and terminated
all of the commitments under the Credit Agreement with BOA as Administrative Agent, and the lenders party thereto, referred to herein as the
2011 Credit Agreement. The Company also purchased all $325.0 million of the outstanding 13.25%
senior secured second lien notes due 2018 of
MoneyGram Payment Systems Worldwide, Inc. for a purchase price equal to 106.625 percent
of the principal amount purchased, plus accrued
and unpaid interest, referred to herein as the Note Repurchase. As a result, the Company incurred a pre-tax debt extinguishment charge of
$45.3
million . The Company expects to realize estimated annual cash interest savings of $28.0 million as a result of the refinancing.
Deferred Prosecution Agreement
— In the first quarter of 2013
, a compliance monitor was selected pursuant to a requirement of our settlement
with the U.S. Attorney’
s Office for the Middle District of Pennsylvania, or MDPA, and the Asset Forfeiture and Money Laundering Section of
the Criminal Division of the Department of Justice, or U.S. DOJ. Aaron Marcu is a litigation partner with Freshfields Bruckhaus Deringer LLP
in New York and heads its global financial institutions litigation group. He was among the original list of potential monitors that we submitted to
the U.S. DOJ. The first annual monitor report was provided to MoneyGram in November and per this report MoneyGram is required to make
investments ranging from enhanced systems to more resources deployed in the field. For the twelve months ended December 31, 2013
, we
incurred $6.1 million of expense directly related to the monitor.
Walmart Renewal — In April of 2013, we commenced our renewed agreement with Wal-
Mart Stores, Inc., or Walmart, which is our largest
agent. We continue to provide certain money transfer services, bill payment services and money order services for consumers in Walmart stores
located in the U.S. and Puerto Rico. Pursuant to the terms of the agreement, we serve as the “preferred provider”
for money transfer services
conducted at Walmart agent locations that are not otherwise conducted under a Walmart brand name, subject to certain exceptions.
Global Transformation Initiative — In 2013
, we completed the Global Transformation Initiative, which commenced in the second quarter of
2010 when we announced the implementation of the Global Transformation Initiative to realign our management and operations with the
changing global market and streamline operations to promote a more efficient and scalable cost structure. The initiative included investment in
technology, organizational changes and relocation of certain operations, among other items. In connection with reorganization and restructuring
activities during 2013 , 2012 and 2011 , the Company recorded total expenses of $3.2 million , $19.8 million and $23.5 million
, respectively,
which have all been paid as of December 31, 2013 . This initiative generated annual pre-tax cost savings of approximately $30.0 million.
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