|
Explanation of Responses:
|
|
(
1)
|
All share figures contained in this Form 4 have been adjusted to reflect Thornburg Mortgage, Inc.'s (the "Issuer")
one-for-ten reverse split of its common stock, par value $0.01 per share (the "Common Stock"), that was effected on
September 26, 2008.
|
|
(
2)
|
On March 31, 2008, the Issuer raised an aggregate of $1.15 billion from the sale of Senior Subordinated Secured Notes due
2015 ("Senior Subordinated Notes"), detachable Class B warrants exercisable for 16,860,705 shares of Common Stock ("Initial
Warrants") and interests in the Principal Participation Agreement, dated March 31, 2008 ("Principal Participation
Agreement"), in a private placement to qualified institutional buyers under Section 4(2) of the Securities Act of 1933, as
amended, with MP TMA L.P. and MP TMA (Cayman) L.P. and their affiliates (collectively, "MatlinPatterson") as the lead
investor. In addition, $200 million was originally placed in escrow by investors, of which approximately $11.4 million was
withdrawn on June 30, 2008 (the "Escrowed Funds") and the Issuer placed detachable Class B Warrants exercisable into
2,932,336 shares of Common Stock (the "Escrowed Warrants") (prior to giving effect to any anti-dilution adjustments)
(cont'd)
|
|
(
3)
|
(cont'd) in escrow with the Wilmington Trust Company on behalf of such purchasers. Such transaction is collectively referred
to herein as the "Financing Transaction." Pursuant to the Purchase Agreement, for an aggregate purchase price of $433.696
million, MP TMA L.P. and MP TMA (Cayman) L.P. acquired 5,365,882 and 1,598,303, respectively, of the 16,860,705 Initial
Warrants (which have been fully exercised into shares of Common Stock), their respective rights to receive additional
warrants, including the Escrowed Warrants, as provided in the Purchase Agreement, interests in the Principal Participation
Agreement, and $475 million aggregate principal amount of Senior Subordinated Notes. (cont'd)
|
|
(
4)
|
(cont'd) On October 1, 2008, due to failure to satisfy certain conditions in the Purchase Agreement, dated March 31, 2008
("Purchase Agreement") on or prior to September 30, 2008, the remaining $188.6 million of Escrowed Funds was released to the
escrow subscribers. On October 1, 2008, in connection with the release of the Escrowed Funds to the subscribers thereto
pursuant to the terms of the Purchase Agreement, the holders of the Senior Subordinated Notes became entitled to receive
Escrowed Warrants exercisable for 3,156,037 shares of Common Stock (as adjusted for anti-dilution protection for the
issuance of 2,954,422 shares of Common Stock to certain of the holders of Senior Subordinated Notes on
October 1, 2008), which were released to such holders on October 27, 2008 on a pro rata basis (based on the aggregate
principal amount of Senior Subordinated Notes outstanding). (cont'd)
|
|
(
5)
|
(cont'd) Although neither MP TMA L.P. nor MP TMA (Cayman) L.P. was a subscriber to the Escrowed Funds, pursuant to the
Purchase Agreement, each of MP TMA L.P. and MP TMA (Cayman) L.P. became entitled to receive its pro rata portion of the
Escrowed Warrants upon the termination of the Escrow Agreement. After taking into account all anti-dilution adjustments
subsequent to October 1, 2008, MP TMA L.P. and MP TMA (Cayman) L.P. received 1,024,161 and 305,061 shares of Common Stock,
respectively, upon the exercise of their Escrowed Warrants on November 19, 2008. The Escrowed Warrants were exercised at
$0.01 per share of Common Stock received for an aggregate purchase price of $10,241.61 paid by MP TMA L.P. and $3,050.61
paid by MP TMA (Cayman) L.P. for the underlying shares of Common Stock. (cont'd)
|
|
(
6)
|
(cont'd) On November 19, 2008, the exchange offer and consent solicitation (the "Exchange Offer and Consent Solicitation") by
the Issuer in respect of the outstanding shares of its preferred stock expired and the Issuer accepted all validly tendered
shares of preferred stock for exchange. In exchange for the validly tendered shares of preferred stock, on November 21,
2008, the Issuer issued 126,260,109 shares of Common Stock to the tendering holders. Neither MP TMA L.P. nor MP TMA (Cayman)
L.P. participated in the Exchange Offer and Consent Solicitation. As a result, each of the reporting persons ceased to be
10% owners of the Common Stock. (cont'd)
|
|
(
7)
|
(cont'd) Each of the Purchase Agreement, the Warrant Agreement and the Escrow Agreement was filed as an exhibit to the
Issuer's Current Report on Form 8-K/A dated April 4, 2008, and the amendments to each of the Purchase Agreement, the Warrant
Agreement and the Escrow Agreement was filed as an exhibit to the Issuer's Current Report on Form 8-K on July 3, 2008. Each
of these agreements is hereby incorporated herein by reference.
|
|
(
8)
|
On July 8, 2008, MP TMA LLC and MP TMA (Cayman) LLC (the entities which were reported as the direct owners of the Common
Stock in prior filings of MatlinPatterson under Sections 13 and 16 of the Securities Exchange Act of 1934) were converted
from limited liability companies into limited partnerships. In connection therewith, MP TMA LLC and MP TMA (Cayman) LLC were
renamed as MP TMA L.P. and MP TMA (Cayman) L.P., respectively. (cont'd)
|
|
(
9)
|
(cont'd) As of November 21, 2008, each of MP TMA L.P. and MP TMA (Cayman) L.P. was the direct owner of 6,390,043 shares (or
3.6%) and 1,903,364 shares (or 1.1%) of Common Stock, respectively, including shares of Common Stock issued upon the
exercise of the Escrowed Warrants held by each such entity. MatlinPatterson Global Opportunities Partners III L.P. holds 100
percent of the ownership interests in MP TMA L.P. and MatlinPatterson Global Partners III LLC is the general partner.
MatlinPatterson Global Opportunities Partners (Cayman) III L.P. holds 100 percent of the ownership interests in MP TMA
(Cayman) L.P. and MatlinPatterson Global Partners III LLC is the general partner. MatlinPatterson Global Partners III LLC
is also the general partner of each of MatlinPatterson Global Opportunities Partners III L.P. and MatlinPatterson Global
Opportunities Partners (Cayman) III L.P. (collectively, the "Funds"). MatlinPatterson Global Advisers LLC (cont'd)
|
|
(
10)
|
(cont'd) (the "Adviser") is the investment adviser to the Funds. MatlinPatterson Asset Management LLC holds 100 percent of
the voting interest in and equity of each of the Adviser and MatlinPatterson Global Partners III LLC. MatlinPatterson LLC
holds 100 percent of the equity of MatlinPatterson Asset Management LLC. Other than MP TMA L.P. and MP TMA (Cayman) L.P.,
each of the foregoing reporting persons disclaims beneficial ownership of the shares held by MP TMA L.P. and MP TMA (Cayman)
L.P., except to the extent such reporting person holds an indirect pecuniary interest therein, and the inclusion of these
shares in this report shall not be deemed an admission of beneficial ownership of all of the reported shares for purposes of
Section 16 or for any other purpose. (cont'd)
|
|
(
11)
|
(cont'd) Effective April 22, 2008, David J. Matlin and Mark R. Patterson were elected as members of the board of directors of
the Issuer pursuant to MatlinPatterson's rights in connection with the Financing Transaction to designate up to three
directors to the board of directors of the Issuer if it meets certain ownership requirements. Subsequently, David J. Matlin
and Mark R. Patterson were elected to the board of directors for three year terms at the Issuer's 2008 annual meeting.
MatlinPatterson retains the right to designate a third director at any time during which it meets the relevant ownership
requirement. David J. Matlin and Mark R. Patterson each is a holder of 50 percent of the membership interests in
MatlinPatterson LLC. David J. Matlin and Mark R. Patterson may be deemed to have shared voting and investment control over
the shares of common stock of the Issuer held by MP TMA L.P. and MP TMA (Cayman) L.P. (cont'd)
|
|
(
12)
|
(cont'd) They also have indirect pecuniary interests in such shares through their indirect interests in a limited partner
which holds an investment interest and carried interest in the Funds. Their exact pecuniary interests therein are not
readily determinable because they are subject to several variables, including without limitation, the internal rates of
return of the Funds overall and with respect to their indirect investment in the Issuer. David J. Matlin and Mark R.
Patterson disclaim beneficial ownership of any of the reported securities except to the extent of their pecuniary interests
therein.
|
|
(
13)
|
As described above, as a result of the consummation of the Exchange Offer and Consent Solicitation, on November 21, 2008,
each of the reporting persons ceased to be 10% owners of the Common Stock. However, Messrs. Matlin and Patterson, as
directors of the Issuer, will remain subject to the reporting requirements under Section 16 of the Securities Exchange Act
of 1934.
|
Signatures
|
|
MP TMA L.P. /s/ Robert Weiss
|
|
11/21/2008
|
|
**
Signature of Reporting Person
|
Date
|
|
MP TMA (CAYMAN) L.P. /s/ Robert Weiss
|
|
11/21/2008
|
|
**
Signature of Reporting Person
|
Date
|
|
MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS III L.P. /s/ Robert Weiss
|
|
11/21/2008
|
|
**
Signature of Reporting Person
|
Date
|
|
MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS (CAYMAN) III L.P. /s/ Robert Weiss
|
|
11/21/2008
|
|
**
Signature of Reporting Person
|
Date
|
|
MATLINPATTERSON GLOBAL PARTNERS III LLC /s/ Robert Weiss
|
|
11/21/2008
|
|
**
Signature of Reporting Person
|
Date
|
|
MATLINPATTERSON GLOBAL ADVISERS LLC /s/ Robert Weiss, as attorney in fact for David J. Matlin, Chief Executive Officer
|
|
11/21/2008
|
|
**
Signature of Reporting Person
|
Date
|
|
MATLINPATTERSON ASSET MANAGEMENT LLC /s/ Robert Weiss, as attorney in fact for David J. Matlin, Member
|
|
11/21/2008
|
|
**
Signature of Reporting Person
|
Date
|
|
MATLINPATTERSON LLC /s/ Robert Weiss, as attorney in fact for David J. Matlin, Member
|
|
11/21/2008
|
|
**
Signature of Reporting Person
|
Date
|
|
DAVID J. MATLIN /s/ Robert Weiss, as attorney in fact for David J. Matlin
|
|
11/21/2008
|
|
**
Signature of Reporting Person
|
Date
|
|
MARK R. PATTERSON /s/ Robert Weiss, as attorney in fact for Mark R. Patterson
|
|
11/21/2008
|
|
**
Signature of Reporting Person
|
Date
|