Tuesday, September 16

Lehman Brothers - Bankrupt

Lehman Brothers was founded in 1850 by two cotton brokers in Montgomery, Ala.
Lehman Brothers (ticker symbol: LEH) is headquartered in New York, with regional headquarters in London and Tokyo, and operates in a network of offices around the world.

  • The Company operates three business segments: Capital Markets, Investment Banking and Investment Management.
    On September 14, 2008 Lehman Brothers Holdings Inc. (“LBHI”) stated that it has filed a petition under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York. None of the broker-dealer subsidiaries or other subsidiaries of LBHI was included in the Chapter 11 filing and all of the U.S. registered broker-dealers will continue to operate.
    In conjunction with the filing, LBHI intends to file a variety of first day motions that will allow it to continue to manage operations in the ordinary course. Those motions include requests to make wage and salary payments and continue other benefits to its employees.
    LBHI is exploring the sale of its broker-dealer operations and, as previously announced, is in advanced discussions with a number of potential purchasers to sell its Investment Management Division (“IMD”). LBHI intends to pursue those discussions as well as a number of other strategic alternatives.
    LBHI on Monday night was negotiating a last-minute plan to sell large portions of itself to Barclays PLC, the U.K. bank that has been circling the U.S. investment house. Barclays Americas Chairman Archibald Cox Jr. was leading the talks, and an agreement is hoped to be reached by Tuesday.

    Neuberger Berman, LLC will continue to conduct business as usual and will not be subject to the bankruptcy case of its parent, and its portfolio management, research and operating functions remain intact. In addition, fully paid securities of customers of Neuberger Berman are segregated from the assets of Lehman Brothers and are not subject to the claims of Lehman Brothers Holdings’ creditors.
    The directors of certain UK companies including Lehman Brothers International (Europe), Lehman Brothers Holdings Plc, Lehman Brothers Limited and LB UK RE Holdings Limited have concluded that in the absence of ongoing financial support from the ultimate parent company, they are or are likely to become unable to pay their debts as they fall due and accordingly have taken steps to place those companies into administration.
    Net Revenue ($mn)
  • Qtr May 08 - (668)
  • Qtr May 07 - 5512
    Net income ($ mn)
  • Qtr May 08 - (2774)
  • Qtr May 07 - 1273
    Diluted EPS ($)
  • Qtr May 08 - (5.14)
  • Qtr May 07 - 2.21
  • Closing stock price (Nov 2007) $62.63
  • Assets under Mgt (Nov 2007) $282 billion
The stock closed at $0.21 on 15th Sep vs $3.65 on Friday. It was trading at $59.5 on 14th Sep 2007.

"The economy is very weak, the recession wolves are pounding down the door and the financial system faces new deflationary threats from the bankruptcy of Lehman Brothers".

Eyes on AIGMoody's Investors Service cut AIG's rating to A2 from Aa3, a two-notch downgrade. S&P lowered the rating to A-minus from AA-minus, a three-peg reduction, and Fitch Ratings reduced its standing to A from AA-minus, a two-notch cut.

AIG turned to the Fed late on Sunday after failed talks with several buyout firms and Warren Buffett's Berkshire Hathaway. The company has also said it was exploring asset sales.

AIG’s price fell 61% on Monday 15th Sep from $12.14 on Friday 12th Sep to close at $4.76. The stock was trading at $64.96 on 14th Sep 2007; a 93% fall YoY.

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