MoneyGram International Inc., a provider of cash transfers worldwide, won a judge’s permission to pay $10 million to settle a 2011 shareholder lawsuit over a company recapitalization plan.

MoneyGram designed the plan to let controlling investors convert about 29% of their $760 million investment in preferred stock, diluting common stockholders’ value and voting power, investors contended.

The settlement was fair and reasonable given the “uncertainty” of the outcome of a trial, said Delaware Chancery Court Judge J. Travis Laster in approving the agreement today at a hearing in Wilmington.

Laster withheld a decision on a request by plaintiffs’ lawyers for $3.65 million in fees and expenses from the settlement fund, pending receipt of further information.

“We were beating the tar out of each other right to the end” of settlement talks, John C., Wander, a lawyer for Dallas- based MoneyGram, told Laster. The company didn’t oppose the initial fee request.

The settlement, minus legal fees, is to be distributed to shareholders, according to court papers.

The recapitalization agreement, approved last year by shareholders, involved investment affiliates of Thomas H. Lee Partners LP and Goldman Sachs Group Inc.

The case is Pittman v. Clark, CA6387, Delaware Chancery Court (Wilmington).

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