Thornburg Mortgage starts exchange offer, consent solicitation for preferred stock

By Jennifer Chiou

New York, July 23 - Thornburg Mortgage, Inc. announced the start of an exchange offer for all of its 8% series C cumulative redeemable preferred stock, series D adjusting rate cumulative redeemable preferreds, 7½% series E cumulative convertible redeemable preferreds and 10% series F cumulative convertible redeemable preferreds.

The company is also soliciting consents from holders of each series of preferreds to amend its charter to modify the terms of the preferreds. Holders may not tender their preferreds in the exchange offer without delivering consent.

Thornburg is offering $5 in cash and 3.5 shares of the company's common stock for each preferred.

The offer and solicitation end at 10 a.m. ET on Aug. 20.

The company is seeking tenders from holders of at least 66 2/3% of the aggregate liquidation preference of each series of its preferreds.

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

On July 10, Thornburg said a majority of the participants in the principal participation agreement component of its March 31 financing transaction approved an amendment to change the requirement that the tender offer for the preferreds result in the tender of at least 90% of the aggregate liquidation preference of the company's outstanding preferreds.

Additionally, the company previously said that successful completion of the offer will result in the termination of the principal participation agreement, which would allow the company to retain the monthly principal payments on the mortgage-backed securities collateralizing its reverse repurchase agreement borrowings once the override agreement terminates in March 2009, after deducting payments due under those reverse repurchase agreements.

Questions can be directed to the company (888 310-7466) or the information agent, Georgeson Inc. (866 399-8748).

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

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