MoneyGram 2015 Annual Report Download - page 44

Table of Contents
Cash and Cash Equivalents and Interest-bearing Investments
To ensure we maintain adequate liquidity to meet our operating needs at all times, we keep a significant portion of our investment portfolio in cash and cash
equivalents and interest-bearing investments at financial institutions rated A- or better by two of the following three rating agencies: Moody’s Investor Service,
("Moody’s"), Standard & Poor's, ("S&P") and Fitch Ratings, Inc. ("Fitch"); and in AAA rated U.S. government money market funds. If the rating agencies have
split ratings, the Company uses the highest two out of three ratings across the agencies for disclosure purposes. If none of the three rating agencies have the same
rating, the Company uses the lowest rating across the agencies for disclosure purposes. As of December 31, 2015 , cash and cash equivalents (including
unrestricted and settlement cash and cash equivalents) and interest-bearing investments totaled $2.8 billion . Cash equivalents and interest-bearing investments
consist of time deposits, certificates of deposit and money market funds that invest in U.S. government and government agency securities.
Available-for-sale Investments
Our investment portfolio includes $21.1 million of available-for-sale investments as of December 31, 2015 . U.S. government agency residential mortgage-backed
securities compose $9.5 million of our available-for-sale investments, while other asset-backed securities compose the remaining $11.6 million .
Clearing and Cash Management Banks
We collect and disburse money through a network of clearing and cash management banks. The relationships with these banks are a critical component of our
ability to maintain our global active funding requirements on a timely basis. We have agreements with six active clearing banks that provide clearing and
processing functions for official checks, money orders and other draft instruments. We have four active official check clearing banks, which provide sufficient
capacity for our official check business. We rely on three active banks to clear our retail money orders and believe that these banks provide sufficient capacity for
that business. We also maintain relationships with a variety of domestic and international cash management banks for electronic funds transfer and wire transfer
services used in the movement of consumer funds and agent settlements.
Special Purpose Entities
For certain financial institution customers, we established individual special purpose entities ("SPEs") upon the origination of our relationship. Along with
operational processes and certain financial covenants, these SPEs provide the financial institutions with additional assurance of our ability to clear their official
checks. For the years ending December 31, 2015 and 2014 , these SPEs had settlement assets equal to payment service obligations of $2.1 million and $3.1 million
, respectively. See Note 1 —DescriptionoftheBusinessandBasisofPresentationof the Notes to the Consolidated Financial Statements for additional disclosure.
Credit Facilities
On March 28, 2013, we entered into the 2013 Credit Agreement with BOA, as administrative agent, the financial institutions party thereto as lenders and the other
agents party thereto. The 2013 Credit Agreement provided for (i) a senior secured five-year Revolving Credit Facility up to an aggregate principal amount of
$125.0 million and (ii) a senior secured seven-year term loan facility of $850.0 million (“Term Credit Facility”). The Revolving Credit Facility includes a sub-
facility that permits the Company to request the issuance of letters of credit up to an aggregate amount of $50.0 million, with borrowings available for general
corporate purposes and which would reduce the amount available under the Revolving Credit Facility.
On April 2, 2014, we entered into the Incremental Agreement with BOA, as administrative agent, and various lenders, which provided for (i) a tranche under the
Term Credit Facility in an aggregate principal amount of $130.0 million , (ii) an increase in the aggregate revolving loan commitments under the 2013 Credit
Agreement from $125.0 million to $150.0 million , and (iii) certain other amendments to the 2013 Credit Agreement.
The following table is a summary of our outstanding debt balances, net of unamortized debt discount and debt issuance costs at December 31 :
Interest Rate
for 2015
Original
Facility
Size
Outstanding
2016
Interest (1) (Amounts in millions, except percentages) 2015
2014
2013 Credit Agreement
Senior secured credit facility, net 4.25%
$ 980.0
$ 942.6
$ 949.6
$ 41.1
(1) Reflects interest expected to be paid in 2016 using the rates in effect on December 31, 2015 , assuming no prepayments of principal.
As of December 31, 2015 , the Company had no outstanding letters of credit or borrowings under the Revolving Credit Facility, leaving $150.0 million of
borrowing capacity thereunder.
The 2013 Credit Agreement contains various financial and non-financial covenants. We continuously monitor our compliance with our debt covenants. At
December 31, 2015 , the Company was in compliance with its financial covenants.
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