THE BASIS POINT

Will Thornburg Make It? Here’s The Latest

A few weeks ago Thornburg Mortgage began an exchange offer for four classes of its preferred stock, as part of its efforts to remain in business. (Preferred stock holders would receive $5 in cash and 3.5 shares of common stock for each share of preferred stock tendered by August 20th.) The exchange offer is being completed as part of a recapitalization deal Thornburg announced a few months ago to raise $1.35 billion in new capital through an investment by MatlinPatterson. Thornburg needs to have at least two-thirds of each of four classes of preferred stock tendered for exchange to meet the requirements of the exchange offer.

In the last few days, there have been news stories about venture capital funds selling shares. “EJF Capital LLC completely dumped all -255,000 shares they owned of Thornburg Mtg Inc (TMA) as shown by filings made public on 2008-08-06….Vanguard Group Inc sold -5,520,638 (-99.94 %) of their shares in Thornburg Mtg Inc (TMA), bringing their current holdings to 2,928 shares as shown by filings made public on 2008-08-06….” This may be part of the restructuring, or it may be actual sales. But if one looks at the price of their stock, it is around 28 cents per share, the middle of where it’s been over the last month.

On a “When will Thornburg be back in the loan business?” level, someone close to the situation says: “Still going. Lots going on with preferred share holders. Part of the restructure. Stay tuned for end of August.”