Thornburg Mortgage at risk after new margin calls

By Jonathan Stempel

NEW YORK (Reuters) - Thornburg Mortgage Inc TMA.N, a struggling specialist in jumbo home loans, said it may run short of cash after getting surprise margin calls that threaten a restructuring critical to its survival.

In a statement late Monday, Thornburg said its lenders "have made a series of unanticipated margin calls and have withheld funds payable to the company," which Thornburg said was "in direct conflict" with its lending agreement.

Thornburg said if it can't resolve the demands for collateral, it could face "greatly diminished" liquidity compared with what it expected when it began an exchange offer for some preferred stock.

That offer is tied to a $1.35 billion rescue that Santa Fe, New Mexico-based Thornburg lined up in March from MatlinPatterson Global Advisors LLC and other investors following other margin calls, keeping it out of bankruptcy.

Absent a resolution, Thornburg said it won't complete the offer because applicable law prohibits it from paying the cash portion "if, after making the payment, the company would not be able to pay its debts as they become due in the usual course of business or the company's total assets would be less than the sum of its total liabilities."

To conserve cash, Thornburg said it asked some bondholders to accept new debt instead of a Sept. 30 interest payment.

It said MatlinPatterson and its affiliates, which own more than 40 percent of the bonds, "currently intend" to agree to the request. MatlinPatterson invests in distressed companies.

Thornburg and MatlinPatterson did not immediately return calls seeking comment.

Thornburg specialized in mortgages above $417,000 to borrowers with good credit, but ran short of capital as investors stopped buying its loans. The company ended June with $27.2 billion of adjustable-rate mortgage assets on its books.

The company has extended the exchange offer several times, and said it now expires on Sept. 23.

Well over 100 mortgage lenders have stopped lending, been sold or gone bankrupt since the start of 2007.

Thornburg shares closed Monday at 35 cents, New York Stock Exchange data show. Their 52-week high is $14.16, set last Sept. 19.

(Editing by Dave Zimmerman)