Thornburg Mortgage Inc.’s five largest creditors have agreed to give the "super jumbo" lender a one-year reprieve from margin calls if it can raise nearly $1 billion in seven business days.

Thornburg is offering 12 percent interest to anybody willing to buy notes that will mature on April 1, 2015. The notes would be convertible into common stock at 75 percents per share, the lender said in a regulatory filing.

Thornburg had previously disclosed that the company has received $1.8 billion in margin calls this year, of which $610 million were unmet as of March 6 (see Inman News story).

Under the terms of an override agreement Thornburg reached Monday with five creditors, the lender would be able to pay off some of those debts and maintain a $700 million warehouse line of credit that would allow it to continue originating loans.

The agreement requires Thornburg to obtain commitments for at least $1 billion in new capital within three days, and actually raise $948 million of that amount within seven business days.

If Thornburg can raise the money, creditors Bear Stearns Cos, Citigroup Inc., Credit Suisse Group, Royal Bank of Scotland Group Plc and UBS AG will hold off on further margin calls for one year.

If successful, the plan would dilute the value of Thornburg’s stock, but enable it to avoid the forced sale of mortgage-backed securities at a loss to cover its debts.

The agreement covers $5.8 billion of the $7.4 billion of reverse repurchase agreement and commercial paper borrowings outstanding as of March 17, 2008, and the $17.2 billion of auction swap agreements outstanding as of March 6, 2008.


***


What’s your opinion? Leave your comments below or send a
letter to the editor.


Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Real estate news and analysis that gives you the inside track. Subscribe to Inman Select for 50% off.SUBSCRIBE NOW×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription