Wednesday, Thornburg Mortgage, Inc. (TMA) announced that it is commencing an exchange offer for all outstanding shares of its Series C, Series D, Series E and Series F preferred stock. In connection with the offer, the company is also soliciting consents from holders of each series of preferred stock to amend the company's charter to modify the terms of such series of preferred stock. The offer will expire on August 20, 2008.
The company noted that holders tendering their shares should consent to each of the applicable proposed Charter amendments.
The company is offering $5.00 in cash and 3.5 shares of common stock for each share of preferred stock. The conditions for shares to be accepted include that the company receive valid tenders for at least 66 2/3% of the aggregate liquidation preference of each series.
Upon successful completion of the 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 approximately $69 million per year in interest payments until maturity or until the company's Senior Subordinated Secured Notes are earlier redeemed or repurchased.
Additionally, the successful completion of the offer will result in the termination of the Principal Participation Agreement, thereby allowing 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.
Thornburg Mortgage is currently trading at $0.32, up $0.02 or 7.10%.
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