Magazine article American Banker

New Thornburg Bid to Raise Capital

Magazine article American Banker

New Thornburg Bid to Raise Capital

Article excerpt

Thornburg Mortgage Inc. has terminated a $1 billion offering of convertible debt it announced last week and launched a new effort to raise capital as a part of an agreement with creditors to keep the company afloat.

In the new deal, MatlinPatterson Global Advisers LLC, a New York investment fund, has agreed to buy $450 million of Thornburg bonds and the struggling jumbo mortgage lender has agreed to place up to another $900 million of bonds with other investors "reasonably acceptable" to MatlinPatterson.

The bonds would pay an interest rate of 18%, which is to be reduced to 12% after other parts of the deal are achieved, and, subject to shareholder approval, will come with warrants to purchase 90% of Thornburg's fully diluted stock at 1 cent a share.

In a parallel transaction, the bond investors are to pay Thornburg another $100 million in exchange for a claim on income from Thornburg's mortgage portfolio. …

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