MoneyGram International Inc., continuing to suffer from subprime mortgage investments, swung to a loss for the second quarter but continued to make investments to expand its business.
On Friday, MoneyGram said it would triple its number of locations in Canada, to over 3,000, through a multiyear agreement with the mail carrier Canada Post Corp. The value and exact length of the agreement were not disclosed.
Dan O'Malley, a senior vice president and the president of the Americas for MoneyGram, said in a press release, "With one of the largest retail networks in the country, Canada Post's expansion plans help us deliver a truly national network from coast to coast."
On Thursday, MoneyGram reported a net loss of $16 million, or 49 cents a share, compared with a profit of $32.4 million, or 38 cents a share, a year earlier. The Minneapolis company's net securities losses spiked to $30 million, from $381,000 a year earlier.
But Anthony Ryan, MoneyGram's chief operating officer, said in a press release that the company had a "strong quarter in the money transfer business" and that its "strong cash flow will support capital spending to rapidly grow our agent network and to invest in the infrastructure to support our 2008 growth plans."
MoneyGram's fee revenue increased 21% in the second quarter from a year earlier, to $281.9 million, but investment revenue dropped 66%, to $34.5 million. Revenue overall fell 14%, to $286 million. The results were preliminary, MoneyGram said, because it is "finalizing the market valuation of embedded derivatives within ... preferred stock agreements."