Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

MoneyGram Sued by Shareholder Over Recapitalization Plan

April 18 (Bloomberg) -- MoneyGram International Inc., a money-transfer provider, was sued by a shareholder claiming that a recapitalization agreement with affiliates of Thomas H. Lee Partners LP and Goldman Sachs Group Inc. is “grossly unfair.”

The plan, which would allow controlling investors to cash out about 29 percent of their $760 million cash investment in the company’s preferred stock, was challenged by shareholder Willie R. Pittman in a complaint in Delaware Chancery Court in Wilmington. Pittman seeks to block the plan.

“The common stockholders will suffer substantial cash value dilution and voting power dilution through their reduced continuing interest in a much more highly leveraged company,” lawyers for Pittman said in the complaint made public today.

MoneyGram said in March that, as part of the plan, Goldman Sachs would receive $77.5 million in cash and additional preferred shares that may be equal to a 30 percent equity stake if converted to common stock. Thomas H. Lee Partners, a Boston-based private-equity firm, and its co-investors would get $140.8 million in cash and own about 55 percent of the common shares.

A special committee appointed by MoneyGram’s board of directors failed to act with independence and was guided by “conflicted and uninformed advisers,” lawyers for Pittman said in the complaint.

‘Flawed Valuation’

“That adviser provided no fairness opinion, and its financial analysis, particularly its flawed valuation of the preferred stock, was inconsistent with the limited contractual rights of the preferred stock and contrary to Delaware law,” according to the complaint.

Lynda Michielutti, a spokeswoman for MoneyGram, didn’t immediately reply to a phone call and e-mail seeking comment.

Minneapolis-based MoneyGram is the second-largest money-transfer company after Western Union Co. The company sold preferred stock to THL and Goldman Sachs in 2008 after reporting declines in investments linked to the U.S. housing market.

The case is Pittman v. Clark, CA6387, Delaware Chancery Court (Wilmington).

To contact the reporter on this story: Sophia Pearson in Wilmington, Delaware, at spearson3@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.