An investment group lead by Goldman Sachs and Thomas H. Lee Partners have agreed to invest $710M into the company. In return, Moneygram has agreed to sell a 63% stake of itself to the group.
Moneygram announces additional unrealized losses due to its investment portfolio's exposure to sub-prime mortgages. Stocks tumble while rating agencies downgrades the company's credit ratings.
Moneygram's rival, Euronet, expresses interest in buying the company at $20.00 per share.
MoneyGram lowered its earnings outlook for 2007 despite an increase of 14 percent in Q3 profit. The net profit for the quarter was $34.3 million, an increase of 14 percent compared to $30 million last year. However, the company narrowed its EPS range to $1.5-$1.54, compared to previously announced $1.49-1.55. Analysts expect an EPS of $1.53.
Analyst upgraded the stock from ‘market perform’ to ‘outperform’, saying that the company’s investment portfolio has $1 billion of exposure to subprime mortgage-backed securities and CDOs. Further, the analysts added that the company has a strong balance sheet to help them come out of the present difficult conditions.