MoneyGram shares plunge on asset-backed securities losses

Jan 15 (Reuters) - Shares of MoneyGram International Inc (MGI.N) lost half their value on Tuesday, a day after the payment services firm said its net unrealized losses rose to $860 million on a sharp decline in the value of its asset-backed securities. MoneyGram, which revalued its investment portfolio as of Nov. 30, 2007 plans to liquidate a significant portion of the portfolio, as it seeks to raise cash for a major recapitalization.

The company is in talks with a group of investors, led by Thomas Lee Partners L.P., and expects to receive about $750 million to $850 million of equity from the investors and about $550 million to $750 million of new debt facilities from third parties.

MoneyGram said it expects losses related to the liquidation, if it occurs, to be substantially higher than the losses reflected in the revaluation of its investment portfolio.

Shares of the company were down $6.04, or 49.6 percent, at $6.15 in morning trade on the New York Stock Exchange. (Reporting by Sweta Singh; Editing by Bernard Orr)