Thornburg alters by-laws

Thornburg Mortgage Inc. has changed its by-laws to allow a single investor to buy up to $300 million of stock.

Photo: Thornburg alters by-laws

In a filing late Monday with the U.S. Securities and Exchange Commission, Thornburg said its board of directors last week approved a change to allow such an investment, so long as it would not endanger the company's tax-friendly real estate investment trust (REIT) status.

Previously, shareholders were generally limited to a 10 percent ownership stake, Thornburg said.

Thornburg Mortgage Inc. is an American publicly traded corporation headquartered in Santa Fe, New Mexico. Founded in 1993, the company is a real estate investment trust (REIT) that originates, acquires & manages mortgages, with a specific focus on jumbo and super jumbo adjustable rate mortgages. During 2007 and 2008 the company experienced financial difficulties related to the ongoing subprime mortgage crisis that left it on the verge of bankruptcy.

On March 7.2008 the company announced that it would be restating it's 2007 financial results, and also that as of the previous day it had US$610 million in outstanding margin calls, a much greater amount than cash available. Financial analysts speculated that the company may need to seek bankruptcy protection.

Thornburg Mortgage indicated on March 19 that it had reached an agreement with five of its creditors which stopped additional margin calls for one year but included several conditions, the most urgent of which was to raise US$948 million within seven business days. The five creditors were identified as Bear Stearns, Citigroup, Credit Suisse, Royal Bank of Scotland and UBS. The company further confirmed that without the additional capital it may have to file for bankruptcy protection. The funding was to be raised through the sale of convertible notes. Having initially been scheduled for March 20, the company pushed back the sale until March 24.

Thornburg shares closed Monday up 14 cents at $1.27, according to New York Stock Exchange data.