After several false starts, the mortgage manager Firstfolio has put a re-capitalisation plan in place. The company announced yesterday that it had entered into a binding agreement with an investment company to raise approximately A$50.2 million.Australian Capital Enterprise will pay $4.5 million for a placement of 300 million shares at 1.5 cents a share.Firstfolio will raise a further $10.7 million by making a rights issue, which will be fully underwritten by ACE.And ACE will take a second placement of shares worth $35 million, at 3.5 cents a share.The final deal has been scaled back from the original plan. Earlier this year, Firstfolio said its agreement with ACE would result in the raising of $57.6 million of equity capital.Despite putting up less money, ACE will end up with the same stake in Firstfolio - between 50.8 per cent and 75.4 per cent (depending on the outcome of the rights issue).Firstfolio has a loan book worth close to $20 billion, which it has built up through a series of acquisitions over the past few years. Performance suffered as the mortgage market weakened and the company struggled to cope with higher operating expenses and finance costs.The company disclosed in its financial report for the December half-year that it had given Commonwealth Bank an undertaking to raise equity capital and retire debt by March 30. It has been given two extensions since then.At December 31, the company had debt of $64.6 million. It had a $35.3 million senior debt facility with Commonwealth Bank and a $29.3 million loan from a "director related entity". It had net assets of $40.9 million.The December financial report said: "If the consolidated entity breaches its financial covenants as a result of failing to raise capital, and the CBA and other debt providers require the repayment of debt on demand, then, in the opinion of the directors, material uncertainty will exist regarding the ability of the consolidated entity to continue as a going concern."The re-capitalisation plan is subject to shareholder and regulator approval.