seabassbanker

Why Thornburg Mortgage Will Survive

HOW DAT TMA DOING NOW MY FRIEND???

OH WELL...TOO BAD

Why Thornburg Mortgage Will Survive

I have a serious problem with your line of logic for many reasons

1. the shares are diluted...projected shares outstanding on fully diluted basis will number in excess of 3 BILLION...

2. Management clearly showes in this link here that BOOK VALUE is 8 cents after tender...WITH FULL WRITE UP POTENTIAL of 60 cents
yahoo.brand.edgar-onli...

the problem with this is that the JUMBO ARM loans they hold in repo lines (yes the original ones that gave them margin call) are not ones TMA originated...they were bought on the open market and not all of them are AAA...even so I wouldnt want to bet they achieve par value for these...also to note at current they are geared 170x....

3. THEY have a heavy vig to pay going forward and NO ACCESS to new repo lines (per override agreement) |ABCP market is shutdown and they even burned a money market fund....also CMO market for any type of ARM product is dead...you cant borrow at 12% and lend at 8%

so this leaves the question...how do they get money to lever up and loan???? I dont see a way right now and they are not currently doing new loans

so dot hey survive....maybe...ear... power going forward...NONE RIGHT NOW

also to note they will have no access to equity markets for funding as they essentially made a mockery of pref shareholders

so if you dont mind paying 3x book value for a stock that has no earnings power and is essentially in a run-off then yes TMA is a great value...also be aware the real future of the company hinges on 7 billion of Jumbo ARM LOANS THEY DIDNT ORIGINATE...and one more point to ponder...the tender of the preffered will likely just release more supply of TMA stock on the market as

1. the arbs sell to gat the arb price
2. burnt pref investors ride themselves of the whole TMA experience

Haven't We Heard this Market Song Before?

5-7... you are crazy

look at how the options are pricing this stock
you can get synthetically long this stock for .60c by selling june 2.5 put (2.0) and buying june 2.5 (.10) call
that price is much closer to tma's true value post dilution
unless tma falls below .60 you profit

the only reason dilution hasn't been priced into TMA yet seems to be that either bondholders are buying some shares as insurance for a yes vote or massive short-covering, which I doubt.

This is a terrible deal

To anyone considering getting long TMA

Im not going to say dont do it, just that I wouldn't do it nor do I suggest it...

but if you are dead set on it do it via the options as I suggested...
why pay 1.28 for something when you can do it via options for .60

Haven't We Heard this Market Song Before?

Hardnosed

dont you think smart money(as matlin clearly shows he is) wouldn't enter into this deal unless they could guarantee a yes vote.

As of the 11th they will control a 40% voting block... If they haven't already secured a yes from a large couple of holders It would only cost the bondholders bet. 30-60 mil in open market purchases to gain that last block and ensure a yes vote

I believe this vote is a mere formality and it doesn't matter if you vote no. They already have the vote locked up.

Thornburg's a Huge Bargain After Monday's Crash

g father

you raise a good point and my only point was that the bond buyers would be buying the shares on the open market only if they already didn't have a 50% voting block...

Im not sure if they do or not, and in my calculations i didn't take into account the pref f conversion, however, the price action on TMA is a bit strange with such a narrow range and pretty heavy volume

Also the discrepency in the options pricing was another thing that led me to believe that they might not have yet a full 50% and thus were buying some shares on the open market to insure that the further dilution is passed

As a side note an sec filing tonight by Richard Rainwater shows that he bought 75.5 mil of these bonds so that will make the pref. tender a bit easier

Two buyers have been accounted for so far.....

Haven't We Heard this Market Song Before?

This deal is death spiral financing at its finest
A purchase of the company under the guise of a 12% loan
and yes new sec filings shows rainwater got in on this deal too
I believe the only people who are gonna make out are those holding the new bonds and warrants

Thornburg's a Huge Bargain After Monday's Crash

i'm pretty sure the new investors will vote for the dilution
why wouldnt they. they vote yes and they now control 95+% of the shares. A big reverse split will shake out small holders then they likely control 96+%...

Matlin et al just bought themselves TMA under the guise of a 12% loan and they are accumulating shares on the open market to make it a slam dunk.

Perhaps once housing cycle recovers then they sell their shares back... these guys are gonna make a killing on this deal, but all at the expense of current and former shareholders

again this is just a theory, I have 0 evidence of it, but I think it explains the price action in TMA stock and the descrepency in options pricing better than any other theory I've heard, plus it fits Matlin's style of controling equity + debt

Thornburg's a Huge Bargain After Monday's Crash

also... if your dead set on still getting long i have a cheaper way of doing it

sell the june 08 2.5 put for 2.00 you cap your upside and unless the stock goes below .50 you makeout
if you don't want to cap your upside you can buy the june 08 call for
.05-.10 and you are synthetically long with a pps of .55-.60

Thornburg's a Huge Bargain After Monday's Crash

i have a theory but it is just that

here it goes:
1. bond owners now control 39.6% outstanding shares and have said they intend to conver april 11th

2. shareholder meeting before june 15th

3. super narrow range and very stable prices with no volitility

i think that perhaps the bond buyers are accumulating very slowly in order to bring their voting power up to near 50%
considering that insiders hold about 1% and those guys will also vote yes i think this could be a plausible theory

by my calculation they would need to accumulate about 40 million shares

so they would only be commiting about 60-70mil in new capital

they have essentially bought this company and get a 12% return on their money from the company
upon the passage of the vote they will own 95% of the company...then a reverse split will shake out the small players, again a small amount of capital in comparison, to buy out small shareholders

Also considering that the new bondholders control 1/2 the BOD it looks like death spiral, compliscent takeunder of this company

Brilliant play on matlin's and bondholder's part

20mil vol today, dont remember yesterdays

it is resonabbl to assume that the bondholders could surface with a controling interest

furthermore that 39.6% is a clever number in that each of the 3 bondholders could each accumulate 4.9% of tma's outstanding shares before the 4/11 convert and fly below the SEC reporting rules

look over the charts
i think we are seeing an organized accumulation with a floor bid
once this bid is gone the vix will return and i think this stock plumetts

this is the best piece of corporate finance i've seen in a while

makes me want to give matlin every dime i have to invest