Thornburg Reports $3.3 Billion First Quarter Loss.(Financial report)

Santa Fe, NM -- Thornburg Mortgage here, reeling from mark-to-market and impairment charges, reported a $3.3 billion first-quarter loss.

But CEO Larry Goldstone said much of the loss reflects a number of "nonrecurring and accounting driven" fair market value adjustments which the company was forced to run through its income statement because of uncertainty about whether or not Thornburg can hold the affected mortgage securities to maturity.

Sorting out the accounting treatment of Thornburg's assets has been a messy business. The company twice delayed reporting its first-quarter results. And even last Thursday, when the company issued its earnings release, it still did not provide a balance sheet or formal income statement.

The loss, which came to $20.64 per common share, reflected weak housing market conditions and secondary market turmoil in the first quarter, CEO and president Larry Goldstone said.

As a result of margin calls from the company's creditors, Thornburg had to sell assets and seek alternative financing for assets that remained in portfolio, he noted.

"Even in this difficult overall market, we were able to raise new capital to provide further liquidity to meet our borrower obligations," he said.

But the company's new financing deal, reached in March, gives its creditors the opportunity to buy half of Thornburg at fire-sale prices, considerably diluting current shareholders. On the plus side, the deal gives Thornburg a one-year reprieve from new margin calls.