(MGI) MoneyGram International Initiates Reverse Split

Yesterday, MoneyGram International Inc. (MGI) announced the filing of a statement for a reverse stock split.

According to the reverse stock split, MoneyGram will be able to contract its shares outstanding by issuing one share for every 8 shares outstanding. This implies that one share of MoneyGram would be then valued at a price equivalent to the current total price of 8 shares.

The total market capitalization remains the same by this method. However, the number of shares, issued and outstanding, will be trimmed to about 49.8 million shares from about 398.7 million shares, as a result of the reverse stock split.

While the reverse stock split became effective yesterday, the same will begin trading today for the next 20 trading days under the ticker symbol ‘MGID’. Moreover, no fractional shares will be issued for reverse stock split and all of them will be aggregated and issued in the market by MoneyGram’s exchange agent – Wells Fargo Shareowner Services of  Wells Fargo & Co. (WFC).

Separately, MoneyGram announced a secondary offering of shares worth 11.25 million that were owned by investors of private equity firm Thomas H. Lee Partners and Goldman Sachs Group Inc. (GS) under the recapitalization program, which was initiated during the second quarter of 2011. However, MoneyGram will not receive any part of the booty from the share issue.

Moreover, the underwriters of the secondary offering have been granted an option to buy an additional 1,687,500 shares within the next 30 days of the share offering. The secondary share issue will commence post the culmination of the reverse stock split.

Besides, MoneyGram has appointed Morgan Stanley (MS), Goldman, Sachs & Co., Bank of America Corp. (BAC), JP Morgan Chase & Co. (JPM) and Wells Fargo as the book running managers, while  William Blair & Company, Morgan Keegan and PiperJaffray are asco-managers.

MoneyGram has not only been vigorously working to restructure its capital but continue with its money transfer network expansion at the same time. In this context, last week, the company added National Bank of the Uzbekistan Republic to its money transfer network, thereby adding more than 875 locations in and around the region. Overall, MoneyGram continues to grow by revamping its balance sheet and capital position, while also exploring new growth avenues in untested locations.

On Monday, the shares of MoneyGram closed at $2.61, down 9.1%, on the New York Stock Exchange.

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MONEYGRAM INTL (MGI): Free Stock Analysis Report

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