Thornburg Mortgage said on Thursday it raised $500 million by selling convertible preferred stock, a move that will boost funding and allow it to resume making new loans after getting hit by a credit squeeze.
The dividend rate will be the higher of 10 percent or the dividend yield on Thornburg common stock. The preferred shares are convertible into common shares at any time at $11.50 per common share, the company said.
Net proceeds from the preferred sale were about $473 million. Underwriters have an option to purchase up to 3 million additional shares.
Thornburg shares were up more than 7 percent after being halted Thursday morning.
The stock sale will likely hurt Thornburg's earnings per share but give the jumbo mortgage specialist time to stabilize its funding.