Thornburg Ensnarled by SEC

Who knew one late quarterly filing could cause this much drama? Thornburg Mortgage (TMA) needs more time to sort out its mess. The Company again postponed the filing of its first quarter 10-Q, citing the ongoing complexity of the accounting issues raised by infamous Hail Mary deal of March 31. Until Thornburg dutifully sorts out its homework, it's gonna face the wrath of quite a few angry investors.

Thornburg Mortgage’s delay in filing its Form 10-Q impacts the timing of several other pending transactions. Until the Form 10-Q is filed, the Company cannot file (1) the prospectus supplements for the registration of resales of Senior Subordinated Notes and common stock issued upon exercise of warrants (meaning MatlinPatterson is stuck with a sizable illquid investment), or (2) the Registration Statement on Form S-4 and related documents relating to the previously announced exchange offer for the Company’s preferred stock (meaning those guys can't get their $5/share payoff until September 30, 2008.)

Unrelated to the matters described above, on May 29, 2008, the Company received a letter from the NYSE stating that the Company is not in compliance with the NYSE’s continued listing criteria under Section 802.01C of the NYSE Listed Company Manual because the average closing price of the Company’s common stock has been less than $1.00 for 30 consecutive trading days. (emphasis added)

To cure this deficiency, the Company’s common stock must regain a $1.00 share price and a $1.00 average share price over 30 consecutive trading days. If the Company has not cured the deficiency within six months, the common stock will be subject to suspension and delisting procedures. The Company intends to cure this deficiency by implementing a reverse stock split, and has notified the NYSE of its intent. Shareholder approval of the reverse stock split is not required. Specific information regarding the timing and details of the reverse stock split will be released at a later date. (emphasis added)

With all the gymnastics and gyrations Thornburg has performed in the last year, a reverse split should be no problem.