Wednesday, March 19, 2008

Speaking of Alt-A...

Holy Mother of Dilution! TMA (remember them? nearly bankrupt alt-a lender) just outlined its plan to stay in business and it is UGLY. Apparently, it has secured a one-year reverse repo from 5 counterparties (the nearly bankrupt BSC, C, CSFB, Greemwich, RBS, IBS) who have agreed to provide $5.8 billion in financing in return for warrants to purchase 47 million shares for $.01. Yes, I did say a penny. This represents 27% of outstanding shares. ADDITIONALLY, TMA has to raise $1 billion, which they plan to do by issuing a convert that pays 12% and has a conversion rate of $.75 a share. They will use the proceeds to pay margin calls. Translation? TMA is toast!


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