Thornburg Raises $1.35 Billion to Avoid Bankruptcy

Thornburg Mortgage, a jumbo mortgage provider that has been trying to avoid bankruptcy, on Monday said it raised $1.35 billion from a sale of debt and warrants to buy common stock.

The Santa Fe, New Mexico-based company said it has received $1.15 billion of the proceeds, and that the other $200 million will be held in escrow until the completion of a tender offer for preferred stock. It said the new subordinated notes carry an initial interest rate of 18 percent.

Existing shareholders will see their interests significantly diluted by the offering. Thornburg said that upon completion of the various transactions, common shareholders will hold about 5.5 percent of its common stock.

Thornburg specializes in adjustable-rate mortgages in amounts above $417,000, which have typically gone to buyers of more expensive homes who are considered good credit risks. Many investors, nevertheless, stopped buying these mortgages as credit markets tightened.


  • More and more people are hiding cash in places other than a bank, according to an American Express study. CNBC's Kelli B. Grant breaks down the best way to stash your cash.

  • The Breakers Palm Beach resort in Palm Beach, Fla., is shown in this aerial view.

    Six hedge fund managers gave their best investment ideas at an exclusive—and private—Morgan Stanley conference. Here are their picks.

  • Deutsche Bank has posted its fourth quarter earnings. Dirk Becker, deputy head of German research at Kepler Cheuvreux, says the bank did "incredibly well."