MoneyGram Shares Surge After Blockchain Company Ripple's Investment

(RTTNews) - Shares of MoneyGram International Inc. (MGI) surged in after-hours trading on Monday after the blockchain company Ripple purchased a stake and reached a partnership for international money transfers.

MGI closed regular trading at $1.45, down $0.04 or 2.68 percent. But in the after-hours trade, the stock gained $2.23 or 153.79 percent.

As part of the partnership, Ripple has made an initial investment of $30 million in MoneyGram equity. It purchased the newly-issued common stock from MoneyGram at $4.10 per share. In addition, Ripple may fund additional purchases of common stock or warrants up to $20 million at a minimum price of $4.10 per share.

As per the deal, MoneyGram will use Ripple's xRapid transaction product to handle cross-border transfers of digital funds for at least two years.

Currently, MoneyGram relies on traditional foreign exchange markets to meet its settlement obligations, which require advance purchases of most currencies.

Under the partnership, the money-transfer service company 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, MoneyGram said in a statement.

Separately, MoneyGram said 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.