MoneyGram Works To Restructure Debt; Could Seek Buyer

MoneyGram International is looking at alternatives for the payments company including a sale, reported Reuters.

Reuters, citing people familiar with the matter, reported MoneyGram is being prompted by its failed bid to sell itself to Ant Financial of China for $1.2 billion to look for strategic alternatives. Reuters reported that in addition to exploring strategic alternatives, the company is currently working to restructure its outstanding debt, which was at $902.8 million as of the end of September. The debt, noted Reuters, comes due next year.  MoneyGram does have access to $80 million in a credit line that it hasn’t withdrawn, noted the report.  Sources told Reuters MoneyGram is focused on getting more time to meet the term of the covenant tied to the credit line by extending the deadline past March. MoneyGram also wants to extend the maturity of the $900 million loan. If it is not extended it will be considered current soon on its books which could worry creditors and shareholders, the sources told Reuters.

In November MoneyGram inked an agreement with the U. S. Justice Department to extend a deferred prosecution agreement, which paves the way for MoneyGram to restructure its debt. The agreement has to do with failures on the part of MoneyGram to fight financial fraud, noted the report.

As for a sale of the company, sources said in the report that it’s not a done deal. The sources noted that restructuring advisers on Wall Street have contacted Alex Holmes, the chief executive of MoneyGram, to offer advice, but Holmes has not expressed interest.  When asked about Holmes’ thinking about a sale in November, the CEO and chairman said, “we always entertain discussions,” noted Reuters.

In addition to a potential sale or restructuring of its $900 million in debt, MoneyGram is looking at raising money in preferred equity that would be above shareholders and below lenders for repayment in a restructuring, noted the report. With the money transfer market going digital, the business is facing new competition. To address that, MoneyGram is launching a mobile app to provide customers with more options. It has also beefed up its spending on trying to identify fraudulent wire transfers, noted the report.