By Paul A. Harris
St. Louis, March 25 - Thornburg Mortgage, Inc. announced the private placement of $1.35 billion of 18% seven-year senior secured subordinated notes.
The announcement came on Tuesday in a prospectus, which the company filed with the Securities and Exchange Commission.
The initial issue size is $1.15 billion. An additional $200 million is contingent upon a tender offer.
The notes come with detachable warrants for 48% of the company's common stock.
The initial 18% interest rate will decease to 12% if the company's shareholders approve amendments to increase the number of authorized shares of common stock no later than June 15 and upon the completion of tenders for the company's outstanding preferred stock.
Thornburg Mortgage placed the notes in accordance with a previous agreement to raise a minimum of $948 million of new capital by March 27 as part of the 364-day agreement with five of its reverse purchase agreement counterparties who were providing $5.8 billion of reverse agreement financing.
The company also agreed to reduce their margin requirements and suspend their rights to invoke their margin calls.
According to the prospectus, $450 million of the notes were placed with MatlinPatterson Global Opportunities Partners III LP, MatlinPatterson Global Opportunities Partners (Cayman) III LP.
That placement is subject to placement of at least $700 million, and up to $900 million, of the notes with other investors.
The 18% notes due 2015 are subordinated to all existing senior debt of the issuer and rank equally to any future senior subordinated debt. The notes are senior in right of payment to all existing and future subordinated debt of the issuer.
The notes are guaranteed by each domestic subsidiary of the issuer.
The company is based in Santa Fe, N.M.
Issuer: Thornburg Mortgage, Inc.
| Amount: | $1.15 billion, with up to an additional $200 million contingent upon extent to which the tender offer is accepted
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| Maturity: | March 31, 2015
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| Security description: | Senior subordinated secured notes with detachable warrants for up to 48% of common stock
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| Initial coupon: | 18%
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| Coupon change: | 12% pending shareholder consent to increase common stock and tender for preferred shares
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| Change-of-control put: | 101
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| Investor: | MatlinPatterson Global Opportunities Partners III LP and MatlinPatterson Global Opportunities Partners (Cayman) III LP (for $450 million)
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| Announcement date: | March 24
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