Creditors Give Thornburg One Week to Raise Capital

Wall Street Journal (03/20/08) P. C4; Saha-Bubna, Aparajita; Wei, Lingling
Thornburg Mortgage Inc. saw its shares surge earlier in the week after it disclosed a deal with five lenders: Bear Stearns Cos., Citigroup Inc., Credit Suisse Group, Royal Bank of Scotland Group PLC and UBS AG. When it was learned that this pact hinges on the REIT raising nearly $1 billion in the next week, Thornburg's shares plunged 50 percent. Without the new capital, Thornburg will be forced to sell its remaining mortgage assets; and the sale proceeds likely would not be enough to repay its lenders. Thornburg--which specializes in making large loans to borrowers with good credit--reports that its plan now is to sell $1 billion of subordinated notes, issue warrants to the five lenders to buy 47 million shares and suspend its dividend for a year.