The good news is that there are still sophisticated investors out there willing to lend the company money. Given that the enterprise value of American Home Mortgage is less than the tangible net asset value that wouldn’t normally be a surprise. But the mortgage environment right now dictates that historical asset values may not be all they are cracked up to be.
The bad news is that the financing was expensive - 9.75%, convertible if the shares go above $25, fairly restrictive covenants, and required the company to set up a trust and provide 3% of the proceeds as equity. Which, of course, will all be worthwhile if the company is able to weather the housing/mortgage downturn.
AHM 1-yr chart: