Thornburg Climbs After It Raises $473 Million in Stock Sale

Thornburg Mortgage Inc. announced Thursday it had raised about $473 million by selling convertible preferred stock. The funds will allow the company to resume making loans and buying mortgaged-backed securities. Earlier this month, Thornburg sold about a third of its mortgage assets and halted new loan applications as a result of a having to meet financial obligations that were too expensive to refinance (full story). The preferred shares will pay a dividend of at least 10% and are convertible at $11.50 per common share. The company said in a statement it "believes it is positioned to capitalize on what it expects will be a more profitable mortgage market." AG Edwards analyst Greg Mason noted yesterday "it appears the bleeding in mortgage pricing has stopped for now." Thornburg shares have plunged more than 50% this year. There is the real potential for dilution of earnings as a result of the company having to increase its share count by 35%. However, for now the Street sees this as a positive step: Thornburg shares traded 7% higher to $11.97 midday Thursday.

Sources: Press Release, Bloomberg, Reuters
Commentary: Thornburg Mortgage Hit With Margin Calls; Shares Plunge 47% • The Long Case for Thornburg Mortgage
Stocks/ETFs to watch: TMA. Competitors: WFC, BAC, FNM. ETFs: DON, REM

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Comments

[Ralph F:]

Not sure I'd want to be holding the common stock with a huge block of preferred paying 10% dividends. This sounds like a Warren Buffett investment.

2007 Aug 30 03:13 PM