Lehman posts Jumbo $3B Loss; To Raise $6B

I’ll have more on the brokers later today, but this is simply an enormous whack:

Lehman Brothers to post $3 bln loss; sets $6 bln stock sale   
Marketwatch, June 9, 2008

Charlie Gasparino on CNBC is reporting that he does not expect Lehman to exist as an independent company 6 months from now.

Einhorn comment: "Lehman is raising capital it said it didn’t need to replace losses it said it didn’t have."

LEH is expected to open 10% lower . . .

UPDATE 2: June 9, 2008 8:48am

Here are the details (via CNBC) of the Lehman offering:

$6 Billion secondary is priced at $28.00 common stock.

Convertible offering carries a 8.75% coupon

%18 conversion premium


UPDATE: June 9, 2008 8:02am

Moody’s (MCO) ever timely and precisely accurate, lowers the rating outlook on Lehman Brothers to negative from stable. Moodys: "Concerns over risk management decisions that resulted in elevated real estate exposures and the subsequent ineffectiveness of hedges to mitigate these exposures in the recent quarter."



Dirty Tricks at Lehman? (June 2008) 

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What's been said:

Discussions found on the web:
  1. Eric Davis commented on Jun 9

    Gasparino did do a good job of saying he was wrong last week…

  2. Robert Ward commented on Jun 9

    Are we batting 1.000 yet? Has there ever been a case where a company was repeatedly attacked by the shorts and the company denied and denied? Most demanded that the SEC take action. Then the saga ends with the company going out of business because they weren’t a going concern.

  3. Jim Haygood commented on Jun 9

    After a haircut to the mid-$28 range, the shares have stabilized — presumably under the theory that “the bad news is out.”

    But is it? If Lehman has murky assets that are being valued by a model because there is no market for them, then their value is indeterminate. On a good day, they might be worth something to somebody. On a bad day, with no bids, they might be worth zero in a forced sale.

    Maybe it makes sense for potential acquirers to start nibbling at the shares. But I’ve seen “progressive disclosure” of bad news too many times to get suckered in here. Where they’s smoke, they’s fire.

    Onward to the conference call!

  4. dcm commented on Jun 9

    after last week’s defense of the company, you gotta think gasparino’s going to think twice before defending a financial company with issues again.

  5. VennData commented on Jun 9

    …Callan takes the blame, Fuld survives, his golden parachute re-jiggered to specify “change of control” gets him same full benefits as termination and stays on as board member in the acquiring firm (and member of the special board committee for obtaining cash infusions from TAF whose new motto is “Free markets may work, we just don’t know.”)

    Anymore gloating on this thread and we’re going to get flagged for taunting. So let’s just take the easy score and line up for the kick off. Good job all.

  6. NEAL commented on Jun 9

    That damn Einhorn doesn’t know a GD thing. It’s all the shortsellers, it’s the GD shortsellers I tell ya!! (and yes that is sarcasm).

    You know CNBC, all news is all good all the time. They were embarrassing to watch when Einhorn was on earlier this morning.

  7. Neal commented on Jun 9

    If I had a pension tied up with NJ, I’d be on the phone now, saying “No!” to investing in Lehman.

  8. scorpio commented on Jun 9

    once again, Einhorn lays out the persuasive case for LEH shenanigans. again, Faber says the offer is “oversubsubscribed”! people are buying before they even hear Fuld/Callan’s lies on the conf call at 10 am. unbelievable. they denied everything Einhorn said. now adimit it. and people eat it up.

  9. wally commented on Jun 9

    Trust does matter in the end; there is not much of it around lately. Nor any reason for it.

  10. cinefoz commented on Jun 9

    Based on what I read on Business Week’s site today about how investment banks have been gaming the oil business because of regulatory changes in 2000 that permitted at least some of manipulation, I suspect that GS and others will have similar stories written about them in six months or so because of oil instead of real estate. It looks like Congress is going to make them eat their own shit. Even the Bush CFTC might take action … it looks like they are at least proffering the appearance of action. BW explains the environment and touches on the techniques.

  11. scorpio commented on Jun 9

    sorry, just occurred to me who the oversubscribed buyer is in LEH’s case. who else would inject fantastic sums into historically over-levered financial schemes without asking any basic information or even waiting for a conf call? the Fed, of course. good job Ben! you mullett

  12. AndyS commented on Jun 9

    Man…it’s going to be blood on the streets again today. The financial sector is a total basket case! Here comes the second Fed bailout by printing more money….

  13. larster commented on Jun 9

    It’s about time for Paulson to jump in and state that the crisis has been contained, further shredding his reputation.

  14. steve commented on Jun 9

    Let’s see,,, Einhorn mentioned the 30b in raw land that LEH has,,, & the WSJ just reported LandSource is in chap 11, because land has fallen by 30%…. so that 30b is more like 21b… LEH took 700m,,, that leaves another 8.3b writedown…

  15. scorpio commented on Jun 9

    i know the thread has moved on but i cant let this go. how can anyone w even a modest regard for their capital invest $6 B in a company that wont take questions on a conf call? people. when you find out that your manager has bot these shares, pls sell your fund. unbelievable. i hope the names are publicized tomorrow

  16. michael schumacher commented on Jun 9

    If the “buyer” is still unnamed then I have to subscribe to Steve’s posit above.

    Anyone buying this sack ‘o’ crap without as much as a single public disclosure has to be the biggest schmuck going…..

    Since they’ve washed out the June puts, that everyone and there brother has, this race to the bottom will continue after next week’s option expiry….Love how the stock goes down 9% and even long dated puts tumble as much as 8%…..that’s ok I have more time than LEH’s balance sheet does…


  17. michael schumacher commented on Jun 9

    sorry should have said scorpio….not that Steve’s should be ignored though..


  18. Fredex commented on Jun 9

    Shorter Lehman: “I’m not dead yet!”

  19. Darin commented on Jun 10

    The problem is that banks have been reporting negative core assets since Feb of this year and the FED has finally decided that the crisis has abated. We need Lehman to go under and at least one more to merge before we will know we have hit bottom. I give it another 18 months. $1 Trillion is a very modest estimate of losses. Just look at derivatives…

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