MoneyGram International, Inc. (NASDAQ: MGI), one of the world’s largest money transfer companies, announced today that it has entered into a strategic agreement with Ripple, a provider of leading enterprise blockchain solutions for global payments, that will enable MoneyGram to utilize Ripple’s xRapid product, leveraging XRP in foreign exchange settlement as part of MoneyGram’s cross-border payment process. The partnership supports the companies’ shared goal of improving the settlement of cross-border payments by increasing efficiency and reducing cost through RippleNet.
Through this partnership, which will have an initial term of two years, Ripple will become MoneyGram’s key partner for cross-border settlement using digital assets. As part of this partnership, Ripple has made an initial investment of $30 million in MoneyGram equity, made up of common stock and a warrant to purchase common stock. Ripple purchased the newly-issued common stock (including the shares underlying the warrant) from MoneyGram at $4.10 per share, which represents a significant premium to MoneyGram’s current market price. In addition, at MoneyGram’s election, Ripple may fund additional purchases of common stock or warrants up to $20 million at a minimum price of $4.10 per share.
“I’m extremely excited about Ripple’s investment in MoneyGram and the related strategic partnership,” said Alex Holmes, MoneyGram Chairman and CEO. “As the payments industry evolves, we are focused on continuing to improve our platform and utilizing the best technology as part of our overall settlement process,” said Mr. Holmes. “Through our partnership with Ripple, we will also have the opportunity to further enhance our operations and streamline our global liquidity management. Since our initial partnership announced in January 2018, we have gotten to know Ripple and are looking forward to further leveraging the strengths of both of our businesses.”
Today, MoneyGram relies on traditional foreign exchange markets to meet its settlement obligations, which require advance purchases of most currencies. Through this strategic partnership, MoneyGram will be able to settle key currencies and match the timing of funding with its settlement requirements, reducing operating costs, working capital needs and improving earnings and free cash flow.
“This is a huge milestone in helping to transform cross-border payments. MoneyGram is one of the largest money transfer companies in the world and the partnership will continue to further the reach of Ripple’s network. I look forward to a long-term, very strategic partnership between our companies,” said Brad Garlinghouse, CEO of Ripple.
“We are very pleased with the terms of the Ripple investment which supports the Company with permanent capital and additional liquidity,” said Larry Angelilli, Chief Financial Officer of MoneyGram. “This partnership also provides MoneyGram with the opportunity to improve operating efficiencies and increase earnings and free cash flow.”
Separately, MoneyGram is providing the update that it continues to make progress toward closing the refinancing of its existing first lien term and revolving facilities and expects to announce the closing of that transaction next week.