Thornburg Mortgage Announces Expiration of Override Agreement; continues to evaluate strategic alternatives - update
3/17/2009 3:44 AM ET
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Thornburg Mortgage enters into forbearance agreement - Quick Facts
(RTTNews) - Residential mortgage lender Thornburg Mortgage, Inc. (TMA: News ,THMR.PK: News ) Tuesday said that its Amended and Restated Override Agreement with counterparties, dated December 12, 2008, expired in accordance with its terms. The company also continues to evaluate various strategic alternatives, which may include a consensual restructuring or recapitalization of the company, or a Chapter 11 Bankruptcy petition filing.
The counterparties of the agreement were certain affiliates of the company and JPMorgan Chase Funding Inc. (JPM: News ), Citigroup Global Markets Limited, Credit Suisse Securities (USA) LLC, Credit Suisse International, Greenwich Capital Markets, Inc., Greenwich Capital Derivatives, Inc., The Royal Bank of Scotland plc (RBS: News ), and UBS AG (UBS: News ).
The company said it had reached an agreement with all of the counterparties to forebear from demanding payment or exercising any remedies under their various financing agreements through March 31 to provide the company with additional time to negotiate and implement a restructuring plan.
According to the company, it entered into a Forbearance Agreement with Greenwich Capital Derivatives, Greenwich Capital Markets, RBS, Credit Suisse International, Credit Suisse Securities (USA) and JPMorgan, whereby each of those financing counterparties agreed to provide the company with additional time to restructure its obligations with the counterparties and the company's noteholders. They also agreed, subject to certain terms and conditions, not to exercise through March 31 certain remedies that might otherwise be available to them. During the standstill period, the counterparties will not dispose of any securities or collateral securing their respective financing agreements or take any action to assert any deficiency claims thereunder. The standstill period will terminate earlier if the company breaches certain covenants and will also terminate for each counterparty if any other counterparty breaches its Forbearance Agreement.
Further, the company said that it entered into a Forbearance Agreement with Citigroup. Under the agreement, Citigroup and the company acknowledged that if March 16 were the maturity date of the securities loans outstanding under a Global Master Securities Lending Agreement between the company and Citigroup, the company would be obligated to return to Citigroup cash collateral of $1.02 billion. They further agreed that on March 16, the market value of the mortgage securities collateral pledged by the company to secure its payment obligation to Citigroup under the Global Agreement was $626.4 million.
