Luminent Mortgage Capital, a San Francisco-based real estate investment trust that has been having liquidity problems, has penned a letter of intent to sell warrants equal to a 49% voting equity stake and 51% economic interest to Arco Capital Corp., San Juan, P.R.Arco also arranged for the repurchase of $65 million in mortgage securities portfolios. The warrants have an exercise price of $0.18 per share. Luminent's board of directors audit committee has decided not to seek its shareholder approval for the issuance of the warrants. The company said seeking such approval could seriously further jeopardize the financial viability of Luminent. "The board believes that even with the possibility of sizeable dilution to existing Luminent stockholders, the transactions proposed by the letter of intent with Arco create the best path both to attempt to protect current value and grow potential value going forward," said Trez Moore, Luminent chief executive.

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