MoneyGram International Inc. entered an agreement with an investment group led by Thomas H. Lee Partners LP and Goldman Sachs Group Inc. for a comprehensive recapitalization of the company, which includes a $710 million equity investment in the payment services company.
The deal includes a "go shop" provision allowing for the company, with the aid of its advisers, including J.P. Morgan Securities, to solicit, receive and evaluate alternative proposals from third parties, including from Euronet Worldwide Inc. The provision extends through March 7.
If a superior proposal leads to the execution of a definitive agreement, MoneyGram will be obligated to pay a $15 million break-up fee to Goldman and Thomas H. Lee. About $37.5 million of other fees paid to the investors and affiliates of Goldman Sachs as of the date of the agreement would become nonrefundable.
Goldman Sachs will also provide up to $500 million in debt financing, with an additional $200 million expected to be obtained prior to the close of the transaction.
Minneapolis-based MoneyGram also expects to have $350 million available under its existing credit agreement.
Under the agreement, Goldman and Thomas H. Lee will receive a combination of nonvoting preferred shares and common or common equivalent stock representing about 19.9% of MoneyGram's outstanding shares.
The company also announced an extension of its financial services agreement with Wal-Mart Stores Inc. (WMT) through January 2013.
MoneyGram, which provides bill payment services at more than 3,500 Wal-Mart stores, said the extension is conditioned on the consummation of the recapitalization agreement.
The convertible voting preferred stock will be convertible into MoneyGram at $5 a share, which is expected to give the investors an initial equity interest of about 63%.
