UPDATE 1-Thornburg seeks $1 bln to avert bankruptcy risk

(Adds SEC filings details, byline; rewrites top)

By Jonathan Stempel

NEW YORK, March 19 (Reuters) - Thornburg Mortgage Inc (TMA.N: Quote, Profile, Research), a struggling "jumbo" home loan provider, said on Wednesday it would try to quickly raise nearly $1 billion of capital to keep five lenders at bay and avert a possible bankruptcy filing.

Its shares plunged as much as 49.3 percent after Thornburg said its plan to sell $1 billion of convertible debt and offer lenders a 27 percent stake in the company would significantly dilute existing shareholders' stakes. In afternoon trading, the shares fell $1.40, or 47.6 percent, to $1.57.

The Santa Fe, New Mexico-based company had previously said its survival was in question after being unable to meet lender demands for more than $600 million of cash or collateral.

Thornburg said the new, 364-day agreement with affiliates of Bear Stearns Cos BSC.N, Citigroup Inc (C.N: Quote, Profile, Research), Credit Suisse Group (CSGN.VX: Quote, Profile, Research), Royal Bank of Scotland Group Plc (RBS.L: Quote, Profile, Research) and UBS AG (UBSN.VX: Quote, Profile, Research) would reduce margin requirements and free it from further margin calls and other obligations. It said the lenders were providing about $5.8 billion of financing.

As a condition of the agreement, Thornburg said it must raise a net $948 million within seven business days.

The company said it planned to do so by selling at least $1 billion of subordinated notes that carry a 12 percent interest rate and are convertible into stock at 75 cents per share.

Thornburg also plans to issue warrants to the lenders to buy 47 million shares, and to suspend its dividend for a year.