MoneyGram International, Inc. (MGI) stock prices were down by 8.08% shortly after market trading commenced, bringing the price down to USD$10.22 early in the trading day.
ATM Offering
The company announced on June 7th, 2021 that it had commenced an at-the-market equity offering program that will see the periodic offering and selling of shares of the company’s common stock. The aggregate sales price has been set up to USD$100 million, with BofA Securities acting as the sales agent. Upon the delivery of an issuance notice, the sales agent will employ commercially reasonable efforts, consistent with its normal trading and sales practices, to sell MGI shares as per the company’s instructions.
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Facilitated by BofA
Subject to the terms and conditions outline in the agreement, MGI will specify the price, time, and size limits for the selling of shares by BofA. The shares may be sold by any legal method that is deemed to be an ATM offering, including block trades, ordinary brokers’ transactions on Nasdaq at the prevailing market price at the time of sale, a price related to the prevailing market price, or a negotiated price. As per the agreement, the company may also sell shares to BofA as principal for its own account, with the pricing of this move to be determined at the time of sale.
Termination of Agreement
The company is not under any obligation to execute the sales of the shares as per the agreement and can suspend solicitations and offers at any time. The agreement may be terminated by the company with the submission of a written notice to the BofA for any reason at any time. The agreement may also be terminated by BofA giving written notice to the company at any time, for any reason. Certain extenuating circumstances also warrant a termination of the agreement.
Purpose of Capital
The capital generated from the net proceeds of the equity offering will be allocated towards the partial repayment of the outstanding debt the company has under its First Lien Credit Agreement, dated June 26th, 2019. The capital generated is also authorized to be used to pay off indebtedness from the company’s Second Lien Credit Agreement, dated the same as the First.
Future Outlook for MGI
Armed with the prospects of a solid liquidity position thanks to their ATM equity offering, the company is poised to capitalize on its additional resources to strengthen its balance sheet and come out leaner and more efficient. Current and potential investors are hopeful that management will continue to leverage the resources at their disposal to facilitate significant and sustained increases in shareholder value.
