February 12, 2008 / 2:28 PM / 10 years ago

MoneyGram to sell majority stake to investor group

NEW YORK (Reuters) - Payment services company MoneyGram International Inc MGI.N said on Tuesday it would sell a majority stake in the company to an investment group led by private equity firm Thomas H. Lee Partners THL.UL and investment bank Goldman Sachs & Co (GS.N).

The investors will acquire an equity interest of about 63 percent for some $710 million.

MoneyGram also struck an agreement to receive debt financing of up to $500 million from Goldman Sachs and expects to obtain an additional $200 million in debt financing before the deal closes.

The company also said it sold a total of $1.8 billion of investment portfolio securities, resulting in a realized loss of about $380 million. The $1.8 billion includes a $1.3 billion sale of asset-backed securities it previously announced.

It cautioned that additional losses may be realized through the liquidation of $1.9 billion of other portfolio assets prior to closing.

The deal gives MoneyGram a “go shop” provision where it can seek alternative proposals, including from Euronet Worldwide Inc. (EEFT.O) through March 7th.

    Euronet in December made an unsolicited offer to buy MoneyGram for $20 a share, or $1.65 billion. Discussions did not proceed at the time because the two sides failed to agree on terms under which they would start talks.

    MoneyGram, based in Minneapolis, announced in January that it was considering selling as much as 65 percent of its equity to an investment group as part of a recapitalization plan aimed at making its investment portfolio less risky.

    Shares in MoneyGram rose nearly 10 percent to $5.80.

    Reporting by Megan Davies; Editing by Steve Orlofsky

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