Thornburg Mortgage today made a last ditch attempt to stave off bankruptcy by agreeing a deal with its key creditors, including the recently rescued Bear Stearns, that gives them the option of buying about a quarter of the company for a fraction of its market value.

The lender, which owns $35 billion of mortgage debt, has agreed a deal with Bear Stearns, Citigroup, Credit Suisse, Greenwich Capital, RBS and UBS, that would see the creditors holding off on further "margin calls" for 12 months, as long as Thornburg can raise $1 billion of new capital.

In addition, the agreement gives the lenders the option to buy 47 million shares, representing more than a quarter of its stock, at a penny a share.

Thornburg’s shares, which have dived by 90 per cent in the past year, fell a further 91 cents this morning, or 30.5 per cent, to $2.07.

Thornburg will aim to raise $1 billion in the next seven days by selling bonds with an interest rate of 12 per cent, that can be converted into Thornburg stock at 75 cents a share.

Like many highly-leveraged financial services groups, Thornburg has been inundated with demands for additional collateral by nervous investors as the value of mortgage-backed bonds and other securities plunges.

Meanwhile, America's Fannie Mae and Freddie Mac have agreed to buy more US mortgages and related securities in exchange for the Government reducing the amont of capital the companies have to hold on their balance sheets.

Fannie Mae and Freddie Mac make most of its money from buying home loans from the mortgage lenders. After agreeing to buy more home loans, both companies capital requirement has been reduced from 30 per cent to 20 per cent.

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