MoneyGram (NASDAQ: MGI) stock rallied more than 10% in Monday mid-market trading; following two internal developments that investors have taken kindly to.
Firstly, the company will make a $15 million voluntary term loan principal repayment, and secondly, the board of directors have authorized a stock repurchase program for up to $50 million of outstanding common stock.
The move is a bid to improve the capital structure of the company as well as a promising attempt at reducing any outstanding long-term debt – two green lights that demonstrate internal development as well as shareholder value.
CFO of MoneyGram, Larry Angelilli, stated:
“This announcement demonstrates our confidence in MoneyGram's improving financial strength and long-term trajectory…These actions permit us to improve our capital structure by reducing our outstanding debt, which follows our successful refinancing earlier in the year, and further reduce our interest expense, which is now at the lowest level it has been in years.”
The company has stated that it only intends to utilize the share buyback program in times of severe necessity, so when the stock is victim to serious depreciation, but not obligated to buy any number of shares. Improving capital structure is not only a systemized method of attracting investment, it is a vital part of long-term financial sustainability, and hence Moneygram buyers were quick to move earlier today.
MGI stock has been dominated by sellers the last few months, yet maybe the news is enough to spark a trend reversal with today’s gain of nearly 11% still holding strong. MGI price is trading around $5.80, approaching $6.00 as the next key level.
