Thornburg to Raise $1.35 Billion to Avoid Bankruptcy


Thornburg Mortgage said it was looking to sell up to $1.35 billion of bonds in a private placement as the company tries to raise the funds necessary to keep lenders at bay and avert bankruptcy.

The struggling "jumbo" mortgage lender is paying an annual interest rate of 18 percent on the debt, which can be adjusted down to 12 percent if Thornburg satisfies certain conditions.

The notes come with warrants, or options to buy Thornburg shares at a penny apiece.

The company is also offering to buy at least 90 percent of its outstanding preferred stock at a price of $5 per $25 of liquidation value.

Thornburg said late Monday that it had changed its bylaws to allow a single investor to buy up to $300 million of stock.