MoneyGram to Settle Shareholder Lawsuit for $10 Million
MoneyGram International Inc. (MGI), which provides cash transfers worldwide, agreed to pay $10 million to settle a consolidated 2011 lawsuit filed by an investor who claimed he’d be shortchanged in a recapitalization plan.
The company, based in Dallas, designed the plan to let controlling investors cash out about 29 percent of their $760 million investment in preferred stock, diluting common stockholders’ value and voting power, Willie R. Pittman contended in the lawsuit.
Company officials “deny all allegations of wrongdoing” and the agreement “is not an admission as to any of the claims,” lawyers for MoneyGram said in court papers.
The settlement, if approved at a later hearing by Delaware Chancery Court Judge J. Travis Laster, provides for distribution of the $10 million, minus legal fees and other expenses, to shareholders of record on April 11, 2011, court papers show.
Plaintiff lawyers are asking the judge to award them $3.65 million from the settlement fund, according to court papers.
“We are pleased to have this behind us,” Patty Sullivan, a spokeswoman for MoneyGram, said in an e-mailed statement. She said the recapitalization was “a positive event” and has increased “the attractiveness of our common stock.”
The case is Pittman v. Clark, CA6387, Delaware Chancery Court (Wilmington).
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