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Thornburg Facing Collapse

Can't meet $0.6 billion in margin calls

March 7, 2008

By staff

Thornburg Mortgage Inc., which today said it will restate financial results for last year, has indicated it may not be able to continue in business.

The Santa Fe, N.M.-based company has received notices of defaults from Natixis Securities North America Inc., ING Financial Markets LLC and Goldman, Sachs & Co., according to an 8-K filing with the Securities and Exchange Commission today. The defaults were apparently triggered by an event of default on a repurchase agreement with JPMorgan Chase Bank N.A. reported yesterday.

While Thornburg said it had satisfied $1.167 billion in outstanding margin calls since Dec. 31, 2007, $0.610 billion in additional margin calls were still outstanding as of yesterday.

The real estate investment trust noted the remaining margin calls significantly exceeded its available liquidity.

"These events have raised substantial doubt about the company's ability to continue as a going concern without significant restructuring and the addition of new capital," Thornburg stated in today's filing.

On top of the defaults, the jumbo lender reported that it must recognize an impairment charge totaling $427.8 on its adjustable-rate mortgage assets for 2007.

"The company was advised that KPMG had concluded that the aforementioned financial statements as of and for the year ended December 31, 2007 contain material misstatements associated with available for sale securities and that the auditors' report should have contained an explanatory paragraph indicating that substantial doubt exists relative to the company's ability to continue as a going concern for a reasonable period of time," Thornburg said. "On March 5, 2008, the board of directors of the company, after consultation with management and based upon the recommendation of management and a review of the pertinent facts, determined that the company's financial statements as of December 31, 2007, contained in the annual report on Form 10-K for the year ended December 31, 2007 should no longer be relied upon."

Thornburg added that it has been in continuing discussions with all of its lenders and is unaware of any lenders that have exercised their rights to liquidate pledged collateral thus far, though a filing yesterday indicated JPMorgan had done so.


Crisis Deepens at Thornburg
Thornburg Mortgage Inc. has reported that one of its lenders will begin liquidating some of its assets because the company defaulted on a credit line -- triggering cross-defaults with other lenders.

Liquidity Crisis at Thornburg
Jumbo mortgage lender Thornburg Mortgage Inc. warned today it is facing margin calls that could materially impact its ability to carry on.

Alt-A Liquidity Worsens
Thornburg Mortgage Inc. is facing margin calls on its Alt-A investments.

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