MoneyGram MGI Stock News

As the cryptocurrency sector heats up, Moneygram International Inc (NASDAQ: MGI) sees opportunity. The company announced this morning that it has reached an partnership agreement that will lead to a multi-million dollar equity investment from Ripple, a cryptocurrency startup with backing from various major banks.

As a result of the news, the stock is flying. In fact, so far this morning (just after the bell), MGI is trading on gains of well over 100%.

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MGI Stock Rockets On Cryptocurrency Investment

In a press release issued early this morning, MoneyGram, one of the world’s largest fintech companies, announced that it has entered into a strategic agreement with Ripple. Ripple is a provider of enterprise blockchain solutions for global payments.

As a result of the agreement, MGI will be able to use Ripple’s xRapid product, giving it the ability to process cross-border payments faster. Ultimately, this goes along the line of the company’s goal of improving the settlement of cross-border payments, increasing efficiency while reducing cost. The partnership has an initial term of two years.

Why Investors Are So Excited

There are multiple reasons that this partnership is exciting to investors. First and foremost, cryptocurrency is starting to bounce back, and with MGI using Ripple, not only is it going to benefit from this bounce back, it will be able to process cross-border transactions on a more seamless basis.

Moreover, as part of the partnership, Ripple has agreed to make an initial investment into MoneyGram in the amount of $30 million. The investment will be made by way of common stock and a warrant to purchase common stock.

Ripple purchased newly-issued MGI common stock at a rate of $4.10 per share. This represents a significant premium to the stock’s price, even after the gains in multiples today. Also, Ripple may fund an additional purchase of common stock or warrants up to $20 million at a minimum price of $4.10 per share.

In a statement, Alex Holmes, Chairman and CEO at MoneyGram, had the following to offer:

I’m extremely excited about Ripple’s investment in MoneyGram and the related strategic partnership. 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.

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.

The above statement was followed up by Larry Angelilli, CFO at MGI. Here’s what he had to say:

We are very pleased with the terms of the Ripple investment which supports the Company with permanent capital and additional liquidity. This partnership also provides MoneyGram with the opportunity to improve operating efficiencies and increase earnings and free cash flow.

Side Note

There was also a side note in the press release. In the note, MoneyGram said that it continues to make progress toward the closing of its rifinancing of its existing first lien term and revolving facilities. As such, the company expects to announce the closing of the transaction as soon as next week.

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What Do You Think?

Where do you think MGI stock is headed ahead? Join the discussion in the comments below!

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