Lehman targets up to $6bn in fresh capital
By Ben White, Francesco Guerrera and Joanna Chung in New York
Published: June 6 2008 23:34 | Last updated: June 6 2008 23:34
Lehman Brothers is working on plans to announce early next week that it is raising $5bn-$6bn in fresh capital as the bank discloses a large second quarter loss, people briefed on the matter said.
The earnings announcement, which had been expected for the week of June 16, is likely to be brought forward to address persistent rumours in the marketplace about Lehman’s financial condition. Lehman declined to comment on the timing of its earnings announcement or any capital raising plans.
People briefed on the matter said they expected Lehman to announce earnings and the capital infusion at the same time, perhaps as early as Monday or Tuesday.
These people said the capital infusion may include one or more US institutional investors, such as big pension funds, and one or more foreign banks, possibly from South Korea or Singapore.
The people briefed on that matter noted that Lehman is continuing to discuss its options internally and with potential investors and that any plans to announce a capital infusion could fall apart.
Names mentioned by market sources as possible investors in Lehman include DBS, the Singaporean bank, Korea Development Bank and Woori Financial Group of Korea. All have declined comment or could not be reached.
In the US, market sources have mentioned Calpers, the big California public employee pension fund, as well as the New Jersey Division of Investment.
CV Starr, the investment vehicle of Hank Greenberg, former chairman and chief executive officer of AIG, has also been mentioned. All have declined to comment.
The capital raising is expected to come as Lehman, led by chief executive Dick Fuld, discloses a second quarter loss, the first in its history as a public company, driven by markdowns on mortgage related assets and a decline of $600m to $700m on certain hedging positions.
Lehman has consistently maintained that it does not need to raise capital.
However, one person briefed on Lehman’s plans said the bank wanted to announce the capital raising as soon as possible to bolster investor confidence in its finances and wrong-foot short sellers.
“The market needs a deal to happen sooner rather than later to lay all its fears to rest,” this person said.
Copyright The Financial Times Limited 2008 |
