Thornburg shares plunge on loan default

Time seems to be running out for Thornburg Mortgage (TMA). The jumbo mortgage lender’s shares lost half their value in premarket trading Thursday after the company got a notice of default following Thornburg’s failure to meet a margin call. The disclosure, made in a Securities and Exchange Commission filing Wednesday afternoon, caps off a hectic and depressing week for Thornburg investors. The stock was still above $11 a share before the company admitted last Thursday that a decline in the market value of its mortgage portfolios had led to $300 million in calls for additional collateral from its lenders. Then, on Monday, Santa Fe, N.M-based Thornburg said it got additional margin calls - some of which it wasn’t able to meet, raising the prospect of a fire sale of assets. The company sought to soothe the markets by doing a financing transaction later that day, but Thornburg shares continued to fall.

Now, Thornburg is saying that its failure to meet a $28 million margin call from JPMorgan has led to an event of default on $320 million in loans from JPMorgan, as well as cross-defaults on other loans. “The company’s obligations under those agreements are material,” Thornburg warns. CEO Larry Goldstone has been adamant that Thornburg will weather the tough conditions in the markets and remain independent. He said during a previous liquidity squeeze in August that Thornburg wouldn’t consider filing for Chapter 11 bankruptcy protection. His resolve will surely be tested now. The stock, which fetched $28 a share a year ago, was last quoted at $1.65 in early action Thursday.