MoneyGram International Inc.
) unexpectedly dipped 1.9% on Mar 25, following the announcement
of secondary stock offering by the company's primary investors -
Thomas H. Lee Partners, L.P. and affiliates of
The Goldman Sachs Group Inc.
Accordingly, the aforementioned investors of MoneyGram have
underwritten 8 million shares for selling via public offering.
Additionally, the investors have also granted a 30-day option to
buy another 1.2 million shares. However, MoneyGram will not
receive any proceeds from the secondary offering. Assuming
yesterday's closing price of $18.46, the investors should be able
to generate gross proceeds of about $170 million, including the
On the other hand, MoneyGram also intends to buy back shares
worth $150 million in a private offering from its primary
investors. The share price will based on the mid-point of the
secondary offering price and the market price. The company plans
to raise a term loan in order to fund this share repurchase. Amid
the secondary offering, share buyback and new term loan,
MoneyGram is seeking to expand the share repurchase from
investors up to $300 million.
Moreover, net core earnings accretion of 10 cents per share is
projected from the share repurchases. Further, MoneyGram has
JP Morgan Chase & Co.
), Goldman, Sachs & Co., BofA Merrill Lynch of
Bank of America Corp.
) and Wells Fargo Securities of
Wells Fargo & Co.
) as the book-running managers. Moreover, Macquarie Capital and
William Blair & Co. were assigned as co-managers.
Core Growth in Progress
The company's improving capital and free cash position has
backed this capital restructuring decision. Adjusted free cash
flow surged 29% to $149.8 million in 2013, while consistent cash
flow, sturdy capital position and optimistic guidance for 2014
are deemed impressive.
MoneyGram has not only been vigorously working to restructure
its capital but has been maintaining its money transfer network
expansion as well. In this context, earlier this week, the
company renewed its 17-year money transfer alliance with the UK
Post Office Ltd., retaining its 11,500 postal locations.
According to the World Bank, UK boasts of incremental remittances
with an outward money transfer market worth of $3.7 billion.
Additionally, MoneyGram added Brazil-based financial services
company - Confidence Câmbio to its money transfer network last
week. This will help fortify the company's roots in Latin
America, Mexico and the Caribbean regions, wherein Latin America
had inbound remittances of about $2.6 billion and outbound
remittances of about $1.0 billion in 2012, according to the World
Overall, such efforts progressively help enhance the operating
and competitive leverage of the company and boost its brand
value. Currently, MoneyGram carries a Zacks Rank #4 (Sell).
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