Frozen Tundra

Moody's Dangerous Aggression

This article is irresponsible and ridiculous, as are the comments that precede this one.

Fitch & S&P have made similar announcements w/ similar effects on other companies.

Most ridiculous is the claim that MCO somehow is in league w/ someone (exactly whom, not clear from the conspiracy nuts) to put companies out of business, fatten some hedge fund's wallet, or take other nefarious action.

My experience w/ Moody's suggests they take their reputation, products and credit analysis seriously. That said, they, and the other agencies, messed up big time with regard to structured products, cdo's, subprime and cmbs. Criminal ? Not very likely.

While you dopes blame Moody's, nobody there makes the big bucks. The analysts don't get paid anything like the Wall St. bankers that put together and peddle the crap.

As much as I didn't want to see Bear or LEH or others go under, it is the BANKERS that created, marketed and sold the product; took the insane risks; sold crap to the mutual funds and banks; earned the big fees and the bonuses.

There, and with crooks like Chris Dodd and Barney Frank is where the fault really lies.

Where is your anger at Lehman ? At Fuld, who played a jack high hand into bankruptcy. At Jimmy Cayne, playing golf, bridge and getting high while his company blew up ?

C'mon people, get real.

Thornburg's a Huge Bargain After Monday's Crash

Jack, while the new lenders have an interest in a higher share price, keep in mind that their shares are "free". They still get their $1 Billion + in debt repaid + 18% or 12% as the case may be PLUS 1 Billion or more free shares. So while they would like multi-dollar shares, even at 50 cents, its a windfall profit for them.

Thornburg's a Huge Bargain After Monday's Crash

Welcome back Jack; skiing is certainly better than watching this saga play out.

I am not a big fan of the terms of this deal and stand by my earlier claim that management and the BOD sold out its shareholders to keep running the company. I am still holding about 10k shares w/ all sorts of calls sold against. No BK is better than BK, but where this trades I have no idea. Perhaps we will have some element of randomness that makes no sense which will give us the chance to trade out or around our positions and better our respective outcomes.

It is also possible that given the complications, the timeframes, and the need to get preferred and shareholder approvals, that perhaps a better outcome will ultimately emerge that is not clear to us today. Or perhaps not.

At this point, my downside is clearly limited, this isn't going to zero, and if the stock trades just high enough, I hope to be able to sell more call options over time, hopefully monthly for as long as I hold shares.

The dilution won't occur right away, some of it may never occur, there won't be much float left to short, there may be shareholder litigation over the terms of the deal, lots can happen from here.

It will be interesting to see how this trades tomorrow. When the BSC deal was announced, the talking heads were all yapping $2 is all there will be, these folks are crazy trading BSC for $4. As we know BSC went to $14, has settled in at $10-11 as the terms of that deal were revised upwards, so crazy things can still happen.

GL Jack and other shareholders. And Jack, your mark to market comments / analogies were good ones. Someone called TMA "deadbeat", clearly that person is ignorant of the facts, that is simply not the case.

Thornburg's a Huge Bargain After Monday's Crash

Distressedbuyer: EXCELLENT WORK !! Luv'd it.

After Hours: End Game coming:

a) 8-K suggests there may be a $300 million buyer for something.
b) this is followed by Dow Jones story claiming TMA can't find enough buyers for $1 B convert.

Jack, tell Larry Goldstone to forget about the damn convert !

Sell $300 million in common to the investor. Follow that up with a rights offering for another 200 million with existing shareholders.

At $1.50, that adds 333 million shares, raises $500 million. Plus 47 million to repo lenders. Get the repo guys to back off on the $1 B, accept $500 million as the raise. Less dilution for shareholders, better deal overall. TMA should be able to borrow $500 million at some point soon to bulk up to $1 billion, without converts or warrants.

Much better solution IMO, but then again I am just negotiating with myself.

Back to the news, that DJ article tonight smells like disinformation.

Thornburg's a Huge Bargain After Monday's Crash

I gave them my 2 cents, fwiw.

Thornburg's a Huge Bargain After Monday's Crash

I gave them my 2 cents, fwiw.

Thornburg's a Huge Bargain After Monday's Crash

Jack - I completely understand your points, and I agree that there are some possibilities, however unlikely, that could come to pass. As I have said before, I like the way you think. We'll just have to wait and see what happens, including if anything the Fed does in the coming days will enable TMA to better protect shareholders.

Not counting on it, but have not completely given up hope either.

I did try to get in contact w/ TMA and

Thornburg's a Huge Bargain After Monday's Crash

Distressbuyer - exactly !

From FT.com: (if something like this came thru, would TMA be able to extricate itself from the $1 B "financing" ? - is there time ?)

Central banks float rescue ideas
By Chris Giles and Krishna Guha in London

Published: March 21 2008 22:02 | Last updated: March 21 2008 22:02

Central banks on both sides of the Atlantic are actively engaged in discussions about the feasibility of mass purchases of mortgage-backed securities as a possible solution to the credit crisis.

Such a move would involve the use of public funds to shore up the market in a key financial instrument and restore confidence by ending the current vicious circle of forced sales, falling prices and weakening balance sheets.

Thornburg's a Huge Bargain After Monday's Crash

And as for the Fed, they have already made crystal clear (see BSC) that they do not care one bit about the fate of shareholders, they care only about the banks and the "system".

It is truly obscene.

Thornburg's a Huge Bargain After Monday's Crash

Rose - thank you for your compliment earlier today.

Jack - Kudos to you for continuing to bulldog thru the docs to try to figure this out. I confess that I do not have bandwith at the moment to do the same, relying instead on summaries from the filings and your analysis and others.

Here is the problem from my perspective. It APPEARS that Larry and Garrett have caved in to the dark side; abandoning their fiduciary duties to shareholders in the hopes of retaining management, an ongoing platform, and the prospect of recouping their own losses through fresh incentives that will dwarf what shareholders can expect to recover. I wish this were not so, but all evidence that we can see says that it is. Whether or not this was the best possible deal, we will never know.

The TRAGIC part of this is that the Repo lenders are owed 5.8 billion, but hold collateral that currently has a depressed "market value" of 6.7 billion and a face value of 7.9 Billion. Remember this collateral is AAA rated and essentially fully performing. Nevertheless, the lenders are forcing TMA to the brink of bankruptcy despite having an exposure of 73% loan to face value of AAA collateral.

I find this to be obscene.

Further, as a businessman, I can't see why the lenders could not and will not provide more reasonable forebearance. The 47 million warrants should be more than sufficient, along with the accelarated pay downs from cash flow. The 1 Billion raise at hugely expensive and dilutive terms should not be necessary or a requirement of the repo lender forebearnace.

And this is where TMA management should have drawn their line in the sand, fighting it out in court if necessary.

As for the "less expensive" deal that may be found in the interim, again, I believe (and hope to be proven wrong) that TMA management has already rationalized its deal with the devil at the expense of shareholders, but maybe they will listen to Jack and pursue other options. I just cannot believe, with the terms of the $1 billion loan fully documented and submitted to SEC, with I-bank whores salivating over their 50 million + in fees, that this train can be derailed, and further, that other capital sources, seeing what TMA is willing to give (basically the whole company) for the $1 billion, would rather be part of that than taking a cheaper, and more risky (for them) deal that is better for us.

Again, perhaps TMA will surprise us and tenaciously fight it out to the end and prevail for us, but I am just not optimistic at this point.

If Jack and I were leading the negotiating team we might have a fighting chance.

Have a good weekend all....

Thornburg's a Huge Bargain After Monday's Crash

Jack -

Sorry, I missed your earlier comment about "Drew" getting back to you.

I also agree w/ your reading of the override agreement. Its signed, but can be pulled by the lenders if TMA doesn't come up with the cash by Monday.

I suspect that TMA has been so immersed in getting this financing done, that they may have lost sight of other options. In other words, it appears that the train has left the station. If anything, the delay announcement suggests to me that if anything the deal terms may get worse for us, not better. Also, if TMA possibly has other financing options, they would not / should not have said this:

"We are continuing to work with large investors who have a lot of due- diligence questions, and therefore we've postponed our pricing until Monday while we work through this process with them," said company spokeswoman Suzanne O'Leary Lopez.

If there were other alternatives in the works, they would have not said a thing.

I would like to be surprised on this, but don't hold out much hope.

As for your financing idea Jack, it is very clever and in theory could work. But I fear the wolves are clawing at the carcass thinking about how big their bonuses can be for raping and pillaging TMA, and are not interested in the Good Samaritan solution. So unless Larry and Garrett have their own guardian angel, there doesn't seem to be enough time for this opportunity to present itself.

It is really too bad that we could not make do with a) a lender standstill agreement; b) give the lender's a bunch of warrants; c) suspend dividend and divert cash flow to pay down loans; and d) give TMA MORE TIME ! to raise money as market conditions stabilize / improve.

It is the $1 Billion dollar egregiously dilutive convertiible offering that is threatening to decimate us common shareholders. If we simply eliminated this element, and the lenders ended up w/ 27% of the equity, that would be a fabulous outcome for TMA STOCKHOLDERS, who Larry and Garrett and their Board seem to be throwing overboard.

As far as blame, let's save that for another time. After what happened to TMA in August, Larry's continued addiction to recourse repo financing in a difficult environment was reckless and unwise, and he was challenged by a number of investors and analysts on the last earnings call and was very dismissive of the critics. Just like August caught TMA unawares (the first perfect storm), Larry should have learned his lesson and not continued to be so aggressive and highly leveraged to succumb to a second version of the perfect storm.

So call it what you will, fault or victim of circumstance or a combination of both.

I always liked Larry, but he is derisively referred to as "Larry the Liar" by some in the investment community, terminology I was began to hear applied to him about a week before all this happened. I also suspect that in the case of both BSC and TMA, certain aggressive hedge funds, perhaps seeing weakness or vulnerability, targeted these firms and helped cause this run on the bank, so to speak. Anyway, I digress.

Perhaps your more optimistic view will carry the day. I had thought so as well, before the news released yesterday morning changed my outlook / expectation.

Bring on the White Knight !

Thornburg's a Huge Bargain After Monday's Crash

Jack - just curious - did you reach Goldstone ? what was the message that you left ?

By the looks of things, either this horribly dilutive deal gets done (or even worse) over the weekend, or TMA files BK next week.

No question that TMA has gotten hosed by its lenders, just as BSC got hosed by JPM and the Fed. I cannot comprehend why the Fed and Treasury think its somehow good for the economy to have shareholders wiped out in favor of banks. I do not see how this builds confidence in the markets or the economy, rather it feeds into the view of corporate and government greed and the rich and powerful screwing the average Joe.

As much as we might hope for a "white knight", I don't see that as a possibility. The deal on the table w/ the loads of warrants and low stock conversion prices is much sweeter than any white knight type deal that you are contemplating, and from the looks of things and the commentary that I am hearing from others in the debt markets, $1 billion even on those egregious terms won't be easy to get done.

The banks could have helped save TMA, but the greedy buggers that they are, they are only interested in seizing this opportunity to rape and pillage their borrowers.

Finally, as to the smarmy "junior hedge fund associate" who showed up today with a stick up his butt, I just had to laugh. He really showed his stuff ! Another 2-bit critic who offered nothing of substance. Oh, I miss dealing with those arrogant little twits ...

I hope you reamed Larry Goldstone good Jack; do let us know.

Thornburg's a Huge Bargain After Monday's Crash

Jack -

1. Calling IR at any public company is a waste of time. What I recommend to you (and distressbuyer and anyone else) is to call Goldstone. You probably won't reach him, but you can reach his voicemail and leave a detailed message and call back #. 505-989-1900. follow the voice prompts to the company directory. You will get to his phone. I too do not understand why TMA or its counterparties could not take that AAA collateral to the Fed.

2. Management comes out ahead in that they continue to have jobs and a business to manage, presumably with upside if they succeed over time.

3. TMA seems to have thrown its shareholders under the bus. I don't know how a BOD can sign off on that (just as I don't know how BSC's BOD did the same). I thought that statement TMA made about "the company" vs. "the shareholders" was horrible.

4. Expect lawsuits to fly. Perhaps they can muck up this pending deal, much in the way seems to be happening w/ BSC.

Thornburg's a Huge Bargain After Monday's Crash

gfather, those terms are not too encouraging :>(

Thornburg's a Huge Bargain After Monday's Crash

Well, I may have missed a few days here, but I have been following TMA closely. Until this morning, it appeared that TMA was running the table, getting standstills from the lenders, the Fed action, and so on. The news today was an unwelcome slap in the face given the massive dilution as the price for lender cooperation.

The good news, is that TMA is now perhaps 90% likely to survive, unless they can't raise the billion $. The bad news is that it will be difficult to determine what the proper value for the stock is.

Fortunately for me, my selling of '09 and '10 calls earlier on brought in some meaningful $$ to reduce my cost basis. As Jack indicated, if you are going to hold, you need to trade your position and/or continue to sell calls, assuming that going forward selling close month calls will have any volume. I took in 40 cents at the open on the Oct 7.50s and 1.50 on '10 $5's earlier this week.

I suspect that the price crush today is as a result of a) the dilution; b) the raised spectre in the headlines of possible BK if they can't close the deal; c) folks counting on dividends this year bailing; and d) possilble hedging by prospective convert buyers.

TMA at this point needs to hold a conference call to address where we are, especially the common holders. That would help, i think.

Jack is also correct that at 1.50 is the likely path, longer term, up or down ? But you must sell calls on your stock to continue to hold, unless you are the world's most nimble swing trader.

BSC clearly did not help matters. The common being completely hosed by JPM Paulson and Bernanke. The common holders have a right to be pissed. I hope Lewis and others fight the deal. JPM, instead of paying billions for severance or litigation, should pay a few billion more for BSC and get a friendly deal. $2 is stupidity for a stock that was 90 two weeks ago. Not much difference between that and 0.

One thing is for sure, the twists and turns are not done here. Here's to better days; noting that hope is not a strategy.