Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
As previously disclosed, MoneyGram International, Inc., a Delaware corporation (the “Company”) as Borrower, is a party to that certain Second Amended and Restated Credit Agreement (the “First Lien Credit Agreement”) with Bank of America, N.A., as administrative agent, the financial institutions party thereto as lenders and the other agents party thereto. The First Lien Credit Agreement provides for a senior secured three-year revolving credit facility that may be used for revolving credit loans, swingline loans and letters of credit up to an aggregate principal amount of $35 million, which matures September 30, 2022 (the “First Lien Revolving Credit Facility”). The material terms of the First Lien Credit Agreement are described in the Form 8-K filed by the Company with the SEC on June 26, 2019, which description is incorporated herein by reference.
On March 20, 2020, the Company provided notice to the Revolving Lenders to borrow the maximum available capacity under the Revolving Credit Facility of $23 million as a Eurodollar Advance as a proactive measure to increase the Company’s cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 pandemic. The Company previously had no Revolving Loans outstanding. On March 20, 2020, no more than $23 million was available to borrow as a Revolving Loan under the First Lien Revolving Credit Facility. The First Lien Credit Agreement provides that the amount available for Revolving Loans is limited to an amount no greater than (i) $130 million, minus (ii) the amount set forth on the line item entitled “Cash and cash equivalents” on the Company’s balance sheet as of the last day of the most recent calendar month, subject to a maximum available First Lien Revolving Credit Facility amount no greater than $35 million at any time. The Company’s “Cash and cash equivalents” line item on its February month-end balance sheet was $106.5 million, which allowed for $23 million of Revolving Loan borrowing availability. If the Company’s “Cash and cash equivalents” balance sheet line item as of the last day of any calendar month is greater than $130 million, then the Company will be required to make a mandatory prepayment of any Revolving Loan balance up to the extent of such excess.
In accordance with the terms of the Revolving Credit Facility, the proceeds from this Revolving Loan may in the future be used for working capital, general corporate, or other purposes permitted thereunder. On March 26, 2020, the Company received the proceeds from this Revolving Loan.
The current interest rate for this $23 million Eurodollar Advance Revolving Loan will be the one-month London Interbank Offered Rate (“LIBOR”) plus an Applicable Margin equal to either 6.00% or 5.75% per annum depending on the Company’s First Lien Leverage Ratio. The current Applicable Margin is 6.00%. The LIBOR rate for the First Lien Revolving Credit Facility will always be deemed to be not less than 0.00%.
Capitalized terms not defined in this Form 8-K have the meanings given such terms in the First Lien Credit Agreement.
Forward-Looking Statements
Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in MoneyGram’s SEC filings. MoneyGram’s SEC filings may be obtained by contacting MoneyGram, through MoneyGram’s web site at ir.moneygram.com or through the SEC’s Electronic Data Gathering and Analysis Retrieval System (“EDGAR”) at http://www.sec.gov. MoneyGram undertakes no obligation to publicly update or revise any forward-looking statement.