Thornburg Mortgage, Inc. operates as a residential mortgage lending company, which originates, acquires and retains investments in adjustable and variable rate mortgage (ARM) assets.
According to a press release dated October 28, 2008, the Complaint charges the Company's Board of Directors (the "Board") and additional Defendants with violations of federal securities laws. The Complaint alleges, among other things, that the Proxy fails to provide shareholders with the following material information: (a) any projections, estimates and/or information concerning Thornburg's future business and financial prospects which would allow shareholders to make an informed decision as to whether to tender their shares in the Tender Offer; (b) any projections, estimates and/or information which would allow shareholders to evaluate any strategic alternative to the Tender Offer; (c) any projections or estimates which would allow shareholders to evaluate the impact of a potential bankruptcy on the Company and its preferred shareholders who have the right to a $25.00 per share liquidation preference; (d) any information regarding the viability of any strategic alternatives which the Board considered and/or information relied upon relating to those alternatives; (e) any information concerning the potential or actual conflicts between and among members of the Board, Thornburg and MatlinPatterson and the other parties to an agreement with MatlinPatterson, pursuant to which MatlinPatterson would lend Thornburg approximately $1.35 billion at an initial interest rate of 18% per annum (the "Agreement"); (f) any information, analysis, valuation, projections and/or estimates prepared by, or opinion rendered by, any financial advisor at the behest of the Board concerning the Tender Offer, the Agreement, or any strategic alternative considered by the Board.
The Complaint further alleges that the Thornburg Board has placed its own self-interest above those of Thornburg's shareholders by: (a) agreeing to sell 90% of the Company to MatlinPatterson in return for grossly inadequate consideration in the form of a risk-free loan of approximately $1.3 billion; and (b) launching a coercive tender offer aimed at eliminating the Company's preferred shareholders, simultaneously diluting and devaluing the common shares held by public shareholders.
On January 14, 2009, the Plaintiffs filed a Stipulation agreeing to appoint Jonathan Sion and Dr. Hilla Louise Chashin-Simon Foundation as co-lead Plaintiffs and to approve their selection of the law firms Glancy Binkow & Goldberg LLP and Squitieri & Fearon, LLP as co-lead Counsel and the law firm of Silva, Saucedo & Gonzales, P.C. as liaison Counsel.
On May 5, 2009, Thornburg filed a Suggestion of Bankruptcy. On March 4, 2010, the Plaintiff who filed the initial Complaint voluntarily dismissed his action without prejudice. Plaintiff Dr. Hilla Louise Chashin Simon Foundation, Inc. was not a party to this voluntary dismissal.
