Erik writes:
Why would you purposefully dilute your stock if you had no liquidity issues? That is retarded. I really don't see how anyone can believe them now, BSC all over again.
Erik | Homepage | 03.31.08 - 5:30 pm | #

jonny writes:
Here we go again
jonny | 03.31.08 - 5:31 pm | #

jin writes:
So after Match 31, all the magic will be gone.
jin | 03.31.08 - 5:33 pm | #

barely writes:
Stock holding up AH. I saw they are paying 7-1/2 and the shares convert at a premium? That sounds like a pretty good deal for LEH. There must be something else in the terms. I wouldn't sign up to lend them enough for a cup of coffee on the terms released so far.
barely | 03.31.08 - 5:34 pm | #

Lloyd writes:
Erik, I agree. I actually laughed when I read the part about them not needing capital but want to help perception. Too funny.
Lloyd | 03.31.08 - 5:35 pm | #

Kp writes:
'Tis shotgun wedding season.

Will it be this Friday or next?
Kp | 03.31.08 - 5:37 pm | #

safe_as_apartments writes:
I'm sure the shoe-shine boys are lined up around the block for this great deal.

Ridiculous, totally ridiculous!
safe_as_apartments | 03.31.08 - 5:38 pm | #

dryfly writes:
Institutionalized Investors?

dryfly | 03.31.08 - 5:38 pm | #

rod studwell writes:
Preferred Stock or Herd Shock?
rod studwell | 03.31.08 - 5:39 pm | #

trail writes:
barely - and non-cumulative as well? I agree, doesn't sound like enough of a yield premium to be worth the risk.
trail | 03.31.08 - 5:39 pm | #

safe_as_apartments writes:
'Tis shotgun wedding season.

Someone got Lehman preggers. Man up, son.
safe_as_apartments | 03.31.08 - 5:39 pm | #

AllenM writes:
Um, I wonder if it will be as well received as Thornbird's offering?

Ah, well, Lehman is next up for the chopping block as folks flee their business.

I wonder what will happen when all the hedgie money supporting the market dries up.

After all the Ibanks are calling back their capital rapidly.

Someday this war's gonna end...
AllenM | 03.31.08 - 5:41 pm | #

Kp writes:
Equity Units FTW!
Kp | 03.31.08 - 5:41 pm | #

Barley writes:
L: Great paper, how much do you want?
All: Thanks, we'l pass
L: Great paper, we will add 5% i
All: Naw
L: Great paper, we will add 10% i
All: Naw
L: Great paper, we will add 15% i plus a 1 for 5 convert
All: Naw
L: Great paper, we will add 15% i plus a 1 for 10 convert
All: Okay, but we only pay 70 cents on the dollar for the purchase
L:Done

Tomorrows News Headlines
L successfull all bought share issue raises 3B
C visits the Fed window borrows 3B to cover a purchase agreement
Barley | 03.31.08 - 5:42 pm | #

Ken writes:
can you trade preferred stock for treasuries at the new temporary enhanced discount auction window thingy? If so seems like it might be a good deal for Lehman counterparties to buy these.
Ken | Homepage | 03.31.08 - 5:42 pm | #

dryfly writes:
Someone got Lehman preggers. Man up, son.
safe_as_apartments | 03.31.08 - 5:39 pm | #

Paulson knows a fixer though... works the window, ask for 'Ben'... everything will be just fine.

dryfly | 03.31.08 - 5:43 pm | #

Barley writes:
Note to self > Ken is quick
Barley | 03.31.08 - 5:44 pm | #

ipodius writes:
I've looked a LEH's filings and, let me tell you, 3B in no way will "reassure" me about anything, except the fact that they're circling the bowl as we type.
ipodius | 03.31.08 - 5:45 pm | #

Barley writes:
Institutionalized Investors

lol!
Barley | 03.31.08 - 5:45 pm | #

micahel schumacher writes:
Sounds just like the line from Goldman et al..

"we want to show leadership so we are testing the discount window"

Leadership my ass.....

Ciao
MS
micahel schumacher | 03.31.08 - 5:46 pm | #

dryfly writes:
I've looked a LEH's filings and, let me tell you, 3B in no way will "reassure" me about anything, except the fact that they're circling the bowl as we type.
ipodius | 03.31.08 - 5:45 pm | #

The extra $3B just means Ben the Plumber is gonna need a really big plunger.

dryfly | 03.31.08 - 5:50 pm | #

Noble writes:
Where is that Fed SWAT team???
Noble | 03.31.08 - 5:51 pm | #

Minh writes:
"A billion here, a billion there... Pretty soon it starts to add up to some real money."
Minh | 03.31.08 - 5:51 pm | #

Mo writes:
So are you going to buy some puts? Money where your mouth is...
Mo | 03.31.08 - 5:52 pm | #

Canadaman writes:
WTF is lehman going to do next week to show ample access to capital.......have a bake sale???
Canadaman | 03.31.08 - 5:53 pm | #

S writes:
Maybe it will be Fuld who will do the perp walk? He keeps making comments like that...count on it...Poor CFO, saw what happened to Zoe Cruz, the last one annointed the most powerful woman on Wall Street.
S | 03.31.08 - 5:54 pm | #

crispy&cole writes:
Why not buy this junk from LEH and take it to the Fed window (@2.00%) and work the arbitrage...
crispy&cole | Homepage | 03.31.08 - 5:54 pm | #

barely writes:
"Why not buy this junk from LEH and take it to the Fed window (@2.00%) and work the arbitrage"

That sounds like taking a bigger risk than the risk that started the whole financial collapse. There's like a 30% premium to the shareprice on convert. LEH could be trading in the teens easily. There's some other angle here. The "investors" are short the stock for sure.
barely | 03.31.08 - 6:00 pm | #

Minh writes:
Can the PPT short LEH stock ?
Minh | 03.31.08 - 6:04 pm | #

muntz writes:
I think you guys are missing the point....I am sure that LEH has the deal pre-sold. The risk of a hung deal is too great. OF COURSE 3bn doesnt provide all the liquidity they'd need if there were a run on the bank. But a successful deal shows the market they can accesss capital and it therfore should scare the shorts and improe their situation - at least w/derivatie counterparties. It isn't even that expensive - withness the 8+% deal that Wilmington trust did last week.
muntz | 03.31.08 - 6:07 pm | #

micahel schumacher writes:
short LEH......the common is toast.

Ciao
MS
micahel schumacher | 03.31.08 - 6:08 pm | #

justin writes:
If "now is a good time" (and certainly last year was a much better time) then perhaps lehman see further tightening conditions for capital up the road, either for them, or for the wider market.
justin | 03.31.08 - 6:13 pm | #

saltwater writes:
Any idea how the Convertible / Preferred market will hold up through this???? Several funds of this variety seem to be treading water...... for now.
saltwater | 03.31.08 - 6:13 pm | #

PonziMonetizaCoruptiCapatlism writes:
dryfly writes:
Institutionalized Investors?


they do have opm, they can afford it
PonziMonetizaCoruptiCapatlism | 03.31.08 - 6:13 pm | #

Misean writes:
Hmmm...

Companies borrow money to engage in activities that return more than interest paid, or for short term cash flow smoothing (for the most part). So LEH doesn't have any need for the cash, but their going to pay interest on $3B just 'cuz.

Makes sense to me.

Cheers,
Misean | 03.31.08 - 6:13 pm | #

Mo writes:
This preferred stock has $1000 liquidation preference.
Mo | 03.31.08 - 6:13 pm | #

PonziMonetizaCoruptiCapatlism writes:
I am sure that LEH has the deal pre-sold.


window C at the Fed?
PonziMonetizaCoruptiCapatlism | 03.31.08 - 6:15 pm | #

anon writes:
IPOdius.
I always enjoy reading your posts. "the fact that they're circling the bowl as we type".
..... what a vision.
glad you are around.
anon | 03.31.08 - 6:15 pm | #

Dean writes:
My broker called me up today and asked me if I wanted in on the 'ground floor' of an 'amazing investment opportunity' a in 'leading' financial services firm.

I jumped at the offer...the stock market is stabilizing, there's a new regulatory regime coming down the pipe, uncle Ben is throwing dollars and treasuries out of the helicopters, and I've hedged my debt positions with credit-default swaps.

Safe to say, I'm going to be okay...
Dean | 03.31.08 - 6:16 pm | #

dryfly writes:
So LEH doesn't have any need for the cash, but their going to pay interest on $3B just 'cuz.

Makes sense to me.

The old bankers rule - only lend to those who don't need it so this must prove they don't need it.

Anymore questions?

dryfly | 03.31.08 - 6:16 pm | #

Barley writes:
O/T

CR - Time to reflect on commodities. Especially food and the expected price increases. While not a core aspect of inflation, it will no doubt have an impact on the economy as less disposable dollars in the pockets of consumers. If its hard paying $3.46 for a gallon of gas, how is it going to feel paying six bucks for a small bag of rice or six bucks for a loaf of bread or a buck for a small packet of instant oatmeal.
Barley | 03.31.08 - 6:17 pm | #

Anonymous writes:
Mean while over on capital hill....

Get out the trough, it's feeding time. Congress has decided that an election year with recession written all over it is not the time to be giving up those job-producing "pork" projects bemoaned by both parties' presidential candidates.

As lawmakers returned Monday from a two-week spring break, House Speaker Nancy Pelosi quietly shelved the idea of a one-year moratorium on so-called earmarks, the $18 billion in pet projects that lawmakers sent to their home states this year.

The response from rank-and-file lawmakers after the Senate vote: They sent in so many last-minute earmark requests that a House Appropriations Committee Web site seized up and the deadline for requesting pork had to be extended.

http://www.iii.co.uk/news/?type=...& action=article

Hum
Anonymous | 03.31.08 - 6:17 pm | #

dryfly writes:
They sent in so many last-minute earmark requests that a House Appropriations Committee Web site seized up and the deadline for requesting pork had to be extended.

Don't ya just hate when that happens? Sounds like the hog kill at a meat packing plant...

dryfly | 03.31.08 - 6:23 pm | #

Dean writes:
"We also felt this was the right time as there was a window of opportunity
in the market, as we have received significant interest from several key
institutional investors, who have been strong supporters of the Firm over
time."

I like this quote. It almost makes me forget that the Fed is working the problem in a shroud of secrecy.
Dean | 03.31.08 - 6:24 pm | #

crispy&cole writes:
Breaking news - DEll to close plant and fire many

http://www.journalnow.com/ servle...d=1173355152434



More Breaking news - Fed to accept Dell servers as collateral...things are contained.
crispy&cole | Homepage | 03.31.08 - 6:31 pm | #

Anonymous writes:
I think I'll start an earmark company and the only thing the employees will have to do is show up a Joe's coffee shop every Wednesday a 10am for about 15 minutes to discus next week pay increase and attendance is optional. What the hell now that I think about it that's what most boards of directors and congressmen do.
Anonymous | 03.31.08 - 6:35 pm | #

ZackAttack writes:
I swear to God, I don't see who's taking these secondaries.

Can you think of a single one of these offerings that have made the buyers money? I am struggling to and cannot.
ZackAttack | 03.31.08 - 6:36 pm | #

Angry Saver writes:
This is just what the fed was hoping for. By opening the fed window to investment banks, the fed bought the IBs time to raise capital.

Lehman deserved a fate similar to Bear. There is no justice.
Angry Saver | 03.31.08 - 6:36 pm | #

robbie writes:
Moody's downgrades certain Lehman XS Alt-A deals Moody's Investors Service has downgraded the ratings of 279 tranches from 27 Alt-A transactions issued by Lehman XS Trust Series. One hundred sixty two downgraded tranches remain on review for possible further downgrade. Additionally, 97 tranches were placed on review for possible downgrade. The collateral backing these transactions consists primarily of first-lien, fixed and adjustable-rate, Alt-A mortgage loans.

http://news.moneycentral.msn.com...0331& id=8413129
robbie | 03.31.08 - 6:41 pm | #

Marcus Aurelius writes:
Another Joker placed gingerly atop the already teetering house of cards...
Marcus Aurelius | 03.31.08 - 6:42 pm | #

Marcus Aurelius writes:
robbie | 03.31.08 - 6:41 pm

___

Another revolting development.
Marcus Aurelius | 03.31.08 - 6:44 pm | #

safe_as_apartments writes:
I suspect the real story behind Lehman's offering is that the fat cats in the board room have both run out of matches to light their cigars and fuel for their hearth. It is a dismal day in New York, after all; you can't expect an executive to suffer a chill!

That's not spending cash, that's firin' cash.
safe_as_apartments | 03.31.08 - 6:49 pm | #

Jack Staub writes:
Wasn't the TMA deal expected to close before the market closed today? Did they get their third extension?
Jack Staub | 03.31.08 - 6:51 pm | #

Viewing with alarm writes:
Maria the stock whore was on CNBC pimping this deal after the stock dropped in after hours trading. They must be in a real panic. This is still like watching a train wreck in slow motion.
Viewing with alarm | Homepage | 03.31.08 - 6:54 pm | #

Dr Deflation writes:
CR,
One for the video trailers

http://www.youtube.com/watch?v=W...h? v=WxvmN4ZZ0DE
Dr Deflation | 03.31.08 - 6:56 pm | #

Marcus Aurelius writes:
Lehman is borrowing from friends and family before they head for the pawn shop.
Marcus Aurelius | 03.31.08 - 7:02 pm | #

Owner Earnings writes:
You don't do these kinds of deals unless you NEED (as in you need the money to pay bills etc.) to.
Owner Earnings | Homepage | 03.31.08 - 7:03 pm | #

Anonymous writes:
Fed to accept Dell servers as collateral...things are contained.
crispy&cole | Homepage | 03.31.08 - 6:31 pm | #

LOL!!!

And they can sell the cables for good cion, too!
Anonymous | 03.31.08 - 7:04 pm | #

Owner Earnings writes:
When do the credit rating downgrades of the IB's come? None of them are A, but all have A....
Owner Earnings | Homepage | 03.31.08 - 7:08 pm | #

anon writes:
I feel so bad


Bear Stearns Cos.4:00pm 03/31/2008


BSC Chairman and former Chief Executive James E. Cayne realized $10.3 million from vesting stock awards in 2007.
Alan D. Schwartz, who has been president of the company and became CEO since January, realized $9.76 million from vesting stock awards in 2007, the company said in its annual report with the Securities and Exchange Commission.
Both of the executives' 2007 salary was $250,000, and they didn't receive any bonus or stock awards for 2007.
Bear Stearns shares fell 13 cents to $10.36 in after-hours trading.
anon | 03.31.08 - 7:08 pm | #

Meltdown Man writes:
Tonight I'm thinking of going on a drunken bender - at which point I'll gamble heavily. Tomorrow I'm offering to any of you who might be interested some personal notes...I promise I'll pay YOU back FIRST!!! Any takers?
Meltdown Man | 03.31.08 - 7:10 pm | #

gab writes:
They're claiming the deal was 3x oversubscribed.
gab | 03.31.08 - 7:12 pm | #

Dean writes:
Here's a deal for you...

Trade your garbage paper for Treasuries with the Fed.

Repo out your treasuries for cash with a willing lender (who has also pledged out their garbage for cash).

Use the cash to buy Lehman's offering.

When the term ends on the repo, trade some more of your garbage to the fed for some more treasuries.

Problem solved!
Dean | 03.31.08 - 7:14 pm | #

Dean writes:
Repo out your treasuries for cash with a willing lender (who has also pledged out their garbage for treasuries who then repo'd them for cash
Dean | 03.31.08 - 7:16 pm | #

Anonymous writes:
Eminent Domain??

PHILADELPHIA (Reuters) - Authorities in Philadelphia will suspend foreclosure sales of homes whose owners have fallen behind on adjustable-rate subprime loan payments -- potential relief for tens of thousands of struggling debtors.

Sheriff John Green said on Friday he would halt sales of foreclosed properties in April and would seek a court order extending a moratorium for an unspecified period.

His action follows a nonbinding resolution passed unanimously by the Philadelphia City Council on Thursday calling on Green to stop the sales to give borrowers more time to seek a settlement that would prevent them from losing their homes.
Anonymous | 03.31.08 - 7:17 pm | #

ShortCourage writes:
A friend of mine worked for Bear Stearns many years ago (right after getting his MBA). I remember asking him to explain exactly how IBs add value to the world. He gave the standard response about how IBs help efficiently allocate capital.

What I see is something quite different: The IBs purpose in life is to maximize the amount of capital deployed today, without concern for efficiency, in order to maximize fees. And of course, maximizing the amount of capital deployed today means borrowing as much capital from the future as is possible.

Like any over-leveraged speculator, the IBs will eventually blow up. If they are not allowed to blow up, they will continue to operate in the same manner.

And then they will give us truly inefficient markets, the exact opposite of their promise. For this reason, I hope one or two more of them blow up in this crisis.
ShortCourage | 03.31.08 - 7:23 pm | #

Nemo writes:
Maybe Lehman should create more LEH stock, but instead of selling it, just take it to the discount window as collateral.

There, all problems solved!
Nemo | Homepage | 03.31.08 - 7:31 pm | #

JJL writes:
What is interesting here is if you like conspiracy theories, I have two of them:

(1)The FED is buying the offering - The FED has arranged to buy the offering on the same day of the Treasury Departments big revamp. This timing has the effect of projecting a new found market confidence. Remember one of the new departments for the FED is going to be a "stability team" or some crap. Maybe they got started early? A nice and smooth 3 billion dollar cash infusion to an investment bank as troubled as LEH could be just the confidence booster the FED wants to get out there.
(2)LEH is Going Bankrupt, but FED Promised Bailout Makes Preferred Shares Guaranteed Money - LEH is going to go bust and the necessary FED bailout (you know to avoid a "world ending credit event") is easy money for the buyers as the FED will pay some crazy amount to make the bond holders and preferred shares whole.
JJL | Homepage | 03.31.08 - 7:32 pm | #

Angry Saver writes:
Short Couage,

Well said. The IBs are very efficient at allocating capital to themselves via bonuses. The rest is just collateral damage. They will sell and do anything for bonuses.

They have powerful enablers - the fed & the Government spending.
Angry Saver | 03.31.08 - 7:38 pm | #

crispy&cole writes:
"UBS is poised to reveal further writedowns of up to $18bn"

OUCH!!!!

http://www.ft.com/cms/s/0/ 5bc18e...0077b07658.html
crispy&cole | Homepage | 03.31.08 - 7:41 pm | #

PonziMonetizaCoruptiCapatlism writes:
gab writes:
They're claiming the deal was 3x oversubscribed.

1)taf
2)tlsf
3)supa-fed
PonziMonetizaCoruptiCapatlism | 03.31.08 - 7:42 pm | #

ShortCourage writes:
Has anybody noticed the irony of all these troubled companies selling new issues of stock at rock bottom share prices? I remember during the good times a couple years back when stock prices were high...and companies were doing massive buy-backs!

Talk about poor market timing!

In an ominous parallel to the housing market, this causes the supply of stocks to increase just when the demand seems to be waning!
ShortCourage | 03.31.08 - 7:44 pm | #

Billy Hill writes:
For what it's worth, Meredith Whitney said on CNBC a week and a half ago that Lehman, unlike Bear Stearns, had a real business. However, she also said Bear shareholders were lucky to get $2...
Billy Hill | 03.31.08 - 7:51 pm | #

mack writes:
Money should only be lent for investment in real assets (not securities trading). This would cut out a lot of these issues IMHO.

Contrary to Wall Street spin, trading (price arbitrage) adds no "real" value to any economic system. And lending to facilitate it, compounds the divergence b/w "real" values and "nominal" ones.

This is just my *feeling* (no supporting data), and I'm willing to listen to other opinions.
mack | 03.31.08 - 7:51 pm | #

Billy Hill writes:
Didn't Lehman just get taken for a few hundred million by a couple guys pretending to be officers of a Japanese company?

The rogue trader rides again!
Billy Hill | 03.31.08 - 7:53 pm | #

John writes:
Somebody said 'short lehman'... I did.

They claim 614B long term assets, I suppose meaning the kind they can't sell... wouldn't they rather sell some of this stuff instead of diluting stock with new convertible preferred? a 1% decline in the value of this is 2x what they are trying to raise. Maybe they will be back to sell a bit more desirable equity a later...
Latest report is that leverage is increasing... well, I guess so, they're holding tight to all their assets... did I spell that right?
Wonder what current stockholders are thinking... oh, wait! It's probably 'back up the truck'.
John | 03.31.08 - 7:56 pm | #

Bill writes:
I disagree. If this was really 3x over-subscribed by real buyers, then I say this was a smart move by Lehman. If Bear had raised $3B like this 3 weeks ago, it would still be alive.
Bill | 03.31.08 - 8:04 pm | #

Marcus Aurelius writes:
mack | 03.31.08 - 7:51 pm

___

I think you're correct. Trading is in (due to necessity - when bubbles form and burst), investment is out (might get caught in or out of the current bubble).

I think they're counting on velocity to carry the economy.
Marcus Aurelius | 03.31.08 - 8:05 pm | #

Nemo writes:
mack --

Contrary to Wall Street spin, trading (price arbitrage) adds no "real" value to any economic system.

I think you would enjoy this week's edition of Mauldin's letter:

http://www.investorsinsight.com/...x? EditionID=673

The growing use of quantitative trading models led to a market dominated by traders directing money into companies about which they know little or nothing. This leveling of all economic values to indistinguishable signs did untold damage to economic actors' ability to distinguish valuable assets from worthless ones.
...
HCM would defy the quants to explain in any degree of detail what the companies in their portfolios do. This is another type of investing activity, like private equity, that does little or nothing to provide capital to increase the productive capacity or physical stock of the economy. In fact, quantitative investment strategies are the quintessential "hot money." Enslaved by their computer models, they trade in and out of positions at the blink of an eye. When things go wrong, they blame everybody but themselves. Being a quant means never having to say you're sorry.
Nemo | Homepage | 03.31.08 - 8:06 pm | #

Minh writes:
Peter Schiff:


When lost in the details of these measures, it is easy to miss their unifying goal: pump cash into the market, encourage lenders to keep lending and, ultimately, stop home prices from falling. But try as they might, it won't work.
Minh | 03.31.08 - 8:14 pm | #

Simian writes:
Wells Fargo gets first dibs.
Simian | 03.31.08 - 8:16 pm | #

donna writes:
Heck, for 3 billion I'll start a company and actually produce something.

Eventually.

Think Uncle Ben would cut me a loan?
donna | Homepage | 03.31.08 - 8:19 pm | #

mack writes:
Thanks guys.

There are many benefits to fractional ownership of securities (primarily by allowing a larger share of the populace to share in profits). But, since most companies would rather retain profits than paying dividends, I can't understand the point.

Providing some miniscule divi payout pretty much assures a "trading" culture rather than an "investing" one. And, that's unfortunate b/c when people think they're gambling w/ their money, they'll treat the things they buy w/ equal disdain.

Well, that's my soap box rant about our "capital" markets. There is so much commentary about the state of this market, and all I can say is... until the debt gets out of trading and dividend payouts increase, I'm hapy to stay in the private markets.
mack | 03.31.08 - 8:53 pm | #

Dickeylee writes:
Why doesn't UBS just buy the $3B offered by LB, then they'd just have to write off only $15B this qtr!
Dickeylee | 03.31.08 - 8:56 pm | #

Tom Stone writes:
jeez,don't you guys listen to the Radio?I'm betting someone at LEH sent away for that free CD "Borrow your way to Wealth"!
Tom Stone | 03.31.08 - 8:59 pm | #

Mike in Long Island writes:
No, no, no, with all due respect to CR the article he's citing is wrong. LEH is offering pervertible conferreds. The buyer of the pervertible conferreds gets a 7.5% coupon plus the equivalent of 5 Our Fathers and 4 Hail Mary's for each impure thought they reveal in the confessional. In this case impure thoughts include any subprime, alt-a and soon to be subprime prime MBS they are holding...

This stuff will definitely be over subscribed...
Mike in Long Island | 03.31.08 - 9:03 pm | #

Renterfornow writes:
$3 billion? this is enough for 10 seconds of mark to reality pricing. LEH is toast imo.
Shareholders and debt holders should feel the wrath before any fed movement in to help.
Renterfornow | 03.31.08 - 9:48 pm | #

Not Hillary writes:
Nemo writes: Maybe Lehman should create more LEH stock, but instead of selling it, just take it to the discount window as collateral. There, all problems solved!

Could be. After all, Richard S. Fuld, Jr. , Chairman and Chief Executive Officer, Lehman Brothers Holdings Inc., sits on the NEW YORK FEDERAL RESERVE BOARD!

http://www.newyorkfed.org/ aboutt...ydirectors.html
Not Hillary | 03.31.08 - 10:03 pm | #

jo6pac writes:
That's great the criminals are in charge, thanks for that. It made all the other comments come make sense I think.

The race to the bottom continues.
jo6pac | 03.31.08 - 10:37 pm | #

Trainwreck writes:
Like a trainwreck in slo-mo. Time for Silver Streak II. It's a shame Richard Pryor still isn't alive.
Trainwreck | 04.01.08 - 12:09 am | #

lurker writes:
If I were LEH, i'd do the same thing, raise as much "cheap" money via bonds as they can.

People saw what happened to Bear. The stockholders mostly got screwed but the bondholders were the ones that got bailed out. If LEH implodes, people can expect that they would get bailed out like Bear did.

Risk-free investment for 7% interest in this terrible environment with a possible upside with the conversion? If there was easy access for individual investors, I might even personally bite.
lurker | 04.01.08 - 12:10 am | #

Justme writes:
236.

Wait, I get it. This is the same deal as when BofA bought $4B of preferred stock in CFC, with a conversion price of $18. What is CFC worth on the open market today? That’s right: $6.

By applying some sophisticated math (the details are left as an exercise for the reader), I conclude that LEH will be worth $16-17 sometime in the next few months.

NOT INVESTMENT ADVICE.
Justme | 04.01.08 - 10:52 am | #

Bill writes:
I think Lehman is doing the smart thing. Worst case, it's like a pre-packaged bankruptcy.
Bill | 04.01.08 - 5:15 pm | #