MoneyGram 2015 Annual Report Download - page 5

Table of Contents
History and Development
We conduct our business primarily through our wholly-owned subsidiary, MoneyGram Payment Systems, Inc. ("MPSI") under the MoneyGram brand. The
Company was incorporated in Delaware on December 18, 2003 in connection with the June 30, 2004 spin-off from our former parent company, Viad Corporation.
Through the Company's predecessors, we have been in operation for over 70 years.
In March 2008, we completed a recapitalization pursuant to which we received an infusion of $1.5 billion of gross equity and debt capital, referred to herein as the
2008 Recapitalization. The equity component consisted of the sale to affiliates of Thomas H. Lee Partners, L.P. ("THL") and affiliates of Goldman, Sachs & Co.
("Goldman Sachs") (collectively with THL, the "Investors") in a private placement of Series B Participating Convertible Preferred Stock of the Company (the "B
Stock") and Series B-1 Participating Convertible Preferred Stock of the Company (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 additional 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 (the "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 15,503 additional shares of D Stock and
$77.5 million in cash.
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 1.3 billion to 162.5 million shares. 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 .
2014 Incremental Agreement and Secondary Public Offering — On April 2, 2014, the Company, as borrower, entered into a First Incremental Amendment and
Joinder Agreement (the "Incremental Agreement") with Bank of America, N.A. ("BOA"), as administrative agent, and various lenders. The Incremental Agreement
provided for (a) a tranche under the term loan facility in an aggregate principal amount of $130.0 million (the "Tranche B-1 Term Loan Facility") to be made
available to the Company under the 2013 Credit Agreement, (b) an increase in the senior secured five-year revolving credit facility (the "Revolving Credit
Facility") under the 2013 Credit Agreement from $125.0 million to $150.0 million and (c) certain other amendments to the Amended and Restated Credit
Agreement, which the Company entered into with BOA and various other lenders in March 2013 (the "2013 Credit Agreement") including, without limitation, (i)
amendments to certain of the conditions precedent with respect to these incremental borrowings, (ii) an increase in the maximum secured leverage ratio with which
the Company is required to comply as of the last day of each fiscal quarter, and (iii) amendments to permit the Company to borrow up to $300.0 million under the
facility for share repurchases exclusively from THL and Goldman Sachs. The Company borrowed $130.0 million under the Tranche B-1 Term Loan Facility on
April 2, 2014, and the proceeds were used to fund a portion of the share repurchases from THL, discussed below, reducing the remaining limit for such purchases
to $170.0 million .
On April 2, 2014, the Company completed an underwritten secondary public offering by affiliates and co-investors of the Investors of an aggregate of 9,200,000
shares of the Company’s common stock. As part of the transaction, affiliates of Goldman Sachs converted an aggregate of 37,957 shares of D Stock to 4,744,696
shares of common stock, which were sold as part of the transaction. The selling stockholders received all of the proceeds from the offering. Also, on April 2, 2014,
the Company completed the repurchase of 8,185,092 shares of common stock from the THL selling stockholders at a price of $16.25 per share.
2015 Events
In the first quarter of 2014 , the Company announced the implementation of the 2014 Global Transformation Program, which consists of three key components:
reorganization and restructuring, compliance enhancement and a focus on Digital/Self-Service revenue.
Our reorganization and restructuring activities were centered around facilities and headcount rationalization, system efficiencies and headcount right-shoring and
outsourcing. The Company expects to complete these activities in early 2016 and recorded total reorganization and restructuring expenses of $20.0 million for the
year ended December 31, 2015 .
Our compliance enhancement program was focused on improving our services for consumers and completing the programs recommended in adherence with our
settlement with the U.S. Attorney’s Office for the Middle District of Pennsylvania ("MDPA") and the Asset Forfeiture and Money Laundering Section of the
Criminal Division of the Department of Justice ("U.S. DOJ"). The Company incurred $26.5 million of compliance enhancement program expense for the year
ended December 31, 2015 .
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