Thornburg Mortgage preferred tender completion deadline extended to Sept. 30

By Caroline Salls

Pittsburgh, July 1 - Thornburg Mortgage, Inc. said a majority of the participants in its principal participation agreement have approved an extension of the deadline to complete the company's preferred stock tender offer to Sept. 30 from June 30, according to a company news release.

In addition, holders of about 93% of the contributions to the escrow agreement established to partially satisfy the cash consideration for the tender offer agreed to keep their funds in escrow until the extended deadline.

The principal participation agreement, the purchase agreement and the escrow agreement the company entered into in connection with a March 31 financing transaction were also amended to reflect the deadline extension.

As previously reported, under the terms of the tender offer, for each share of Thornburg Mortgage series C, D, E and F preferred stock that is validly tendered and accepted upon expiration of the tender offer, the holder will receive $5.00 in cash and 3.5 shares of common stock.

Thornburg said any cash consideration required to be paid in addition to the escrowed amounts will be financed from cash on hand.

Upon the completion of the tender offer, the annual interest rate on the company's senior subordinated secured notes due 2015 will be lowered to 12% from 18%, resulting in savings of roughly $69 million per year in interest payments until maturity or until the notes are redeemed or repurchased.

Additionally, the company said the successful completion of the tender offer and consent solicitation will result in the termination of the principal participation agreement, allowing Thornburg to keep the monthly principal payments on the mortgage-backed securities collateralizing its reverse repurchase agreement borrowings once an override agreement terminates in March 2009.

Thornburg is a Santa Fe, N.M., lender specializing in jumbo mortgages.

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