Thornburg stood on the brink of collapse last night as the American mortgage lender outlined a package with creditors that a key ratings agency predicted was “90 per cent likely” to fail.

Thornburg, which owns about $35 billion (£17.6 billion) of home loans and mortgage-backed securities, is in dire need of capital after being inundated with margin calls for additional cash from creditors, after huge declines in the value of its assets.

The package that Thornburg has agreed, with creditors such as Royal Bank of Scotland and Citigroup, effectively would hand the lenders about a quarter of the mortgage group for one cent a share. In return, the creditors would stop issuing margin calls for a year, giving the group a chance to get back on its feet.

The price at which creditors can buy Thornburg shares represents a tiny fraction of the $1.50 at which they closed yesterday. A year ago they were trading at more than $26. The agreement is contingent on Thornburg raising $1 billion of fresh capital in the next seven days to meet outstanding margin calls, pay off some debts and provide a $350 million “liquidity fund”.

Analysts were sceptical that a struggling company with a market capitalisation of less than $300 million would be able to raise a sum more than three times as great as its equity value. Egan Jones, of Egan Jones Ratings, said: “Only one in ten companies in this kind of distressed state manages to avoid the bankruptcy court, so there is a 90 per cent chance that Thornburg will go bankrupt. Raising $1 billion will be very difficult, considering that there doesn’t appear to be any let-up in the problems associated with the mortgage industry.”

Thornburg plans to raise the $1 billion by selling bonds with a 12 per cent interest rate that can be converted into shares at a rate of 75 cents a share, also well below their present market price.

Meredith Whitney, an Oppenheimer analyst, said: “The massive dilution of existing shareholders will characterise 2008. Shareholders in financial institutions are in for a world of pain, because they all desperately need capital, so it’s a buyer’s market.”

Thornburg’s move comes less than a week after Bear Stearns was forced into a takeover by JPMorgan Chase, after a surge in margin calls by its creditors. The agreed sale price of $2 a Bear Stearns share compares with the $80 that it was trading at this month. Shares in Thornburg fell by $1.28, or 57 per cent, in afternoon trading.

Knockdown prices

— Thornburg Mortgages, founded in 1993, has its headquarters in Santa Fe, New Mexico

— The group specialises in so-called jumbo mortgages of $417,000 (£210,000) or more

— In total, it has a $35 billion portfolio of home loans and mortgage-backed securities

— Thornburg's shares have fallen from more than $26 a year ago to end trading yesterday well below $2

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