LEH is pre-trading at 3.65…what do you think will happen today?
I think nothing will happen today except that it will close within 0.1 of its open because nobody wants to mess with Paulson’s weekend plans. That said, on the fringe I think Fuld torpedoes every decent attempt to takeover the company and LEH steams towards insolvency. Stock to near 0 in a month.
Do you think Barclays will taker over LEH? I think people in the market are just throwing out names!
No. No UK bank will buy any American bank/broker. BARC isn’t that much better off than LEH anyway, it has core tier 1 <6%.
HSBC is the best option, both for the company and LEH employees. BAC is still burning from countrywide acquisition, it will be crazy for them to take LEH. I hope it is not BARC.
This just came on FT.com BofA, JC Flowers, CIC planning joint Lehman Brothers bid Bank of America, JC Flowers & Co, the financial investor, and China Investment Co., the Chinese sovereign wealth fund, are considering a possible joint bid for Lehman Brothers, the embattled Wall Street bank. According to people familiar with the matter, the BofA-led group is among those examining a rescue of Lehman, which is racing to find a buyer after shareholders, creditors and counterparties gave a thumbs-down to its efforts to survive as an independent entity. Barclays, the UK bank, is also interested. A forced sale of Lehman Brothers at a fire sale price appears to be the most likely option in the wake of the massive drop in Lehman’s share price over the last few days, people familiar with the matter add. “The only question now is what price,” says one person who has been in discussions with Lehman over possible asset sales as well as with regulators. While the details of any proposal haven’t yet been fully worked out, a bid from the BofA-led group may involve losses for holders of the debt as well as shareholders. That would be a dramatic departure from recent deals where holders of debt were saved even as shareholders suffered heavy losses. Regulators will most probably remain on the sidelines, monitoring the situation but unwilling to offer any potential buyer the sort of guarantees that JP Morgan received in mid-March when it bought Bear Stearns. “Bear Stearns happened so quickly,” says one former Fed official. “At the time, there was no infrastructure to keep Bear alive. Now, there is an infrastructure to prevent a disorderly liquidation with the Fed willing to lend against good collateral.” Moreover, while Bear Stearns was a big player in the credit default swap market, ran an important prime brokerage business and had a big role in the clearing system, Lehman poses less of a threat to financial stability, many of these people believe. ”Lehman may be the poster child for enough is enough,” says a senior executive at one major private equity firm that has been in talks with Lehman regarding possible asset sales. BofA is widely seen as the US financial institution best placed to lead a Lehman takeover. The bank is currently integrating its purchase of Countrywide, the mortgage lender, and its chairman and chief executive, Ken Lewis, has previously suggested the bank is reluctant to expand in investment banking after recent losses. However, BofA may conclude that the opportunity to pick up Lehman at a distressed price may be too good to ignore. Mr. Flowers, a former Goldman Sachs partner who is close to BofA, currently manages about $3.2 bn of CIC’s money in a fund dedicated to taking stakes in financial institutions. The fund was established at CIC’s behest this spring after CIC had earlier been criticized for wasting China’s hard earned reserves as the value of its direct stakes in Blackstone and Morgan Stanley dropped. The CIC fund complements a $7 bn fund that Mr. Flowers has just raised from a wider group of investors. Mr. Flowers has structured that fund so that he can exercise control rather than take minority stakes as private equity firms have done in the past. CIC may invest additional sums in Lehman alongside Mr. Flowers and Bank of America if the group decides to proceed with a bid. A senior executive at CIC declined to comment, while Mr. Flowers and BofA could not be immediately reached for comment. Lehman declined to comment. Lehman is racing to find a buyer in order to prevent a further loss of confidence in the bank. Moody’s, the credit rating agency, has said it will downgrade Lehman unless the bank finds a larger partner. While Lehman has ample liquidity and access to a Federal Reserve liquidity facility, a downgrade would severely limit the bank’s ability to act as a counterparty in the financial markets. There remains a slight chance that Lehman might be forced into a pre-packaged bankruptcy, some of these people believe, despite assurances from Lehman executives on the earnings call Wednesday morning that the firm has a strong capital position and a modest leverage ratio. Senior Lehman executives, including its top managers from Europe and Asia, are gathering at the bank’s headquarters in Manhattan to co-ordinate the rescue efforts. At least since June, Lehman’s embattled chief executive officer Dick Fuld has been refusing various deals that could have saved his firm, arguing that the price on offer was too low. The discussions come amid significant confusion about Lehman’s value. Analysts have voiced considerable scepticism about the value Lehman has assigned to its $33bn commercial real estate portfolio. During a call this week, Lehman officials said the book was marked at about 85 cents on the dollar while its stakes in real estate investment firms Archstone and SunCal were carried at something less than 75 cents on the dollar. Lehman reported a net mark to market loss of $5.6 bn for the third quarter. Lehman’s plight is sure to raise questions both about regulatory oversight and the consequences of mark to market accounting. Some bankers and private equity tycoons including David Bonderman, co-founder of TPG and a minority investor in troubled Washington Mutual, believe that in times of stress, such accounting treatment can lead to a death spiral. That’s because the sale of a small portion of assets at distressed prices can force a firm to mark down the value of all its holdings, leading to rising funding costs—the lifeblood of a securities firm —and plunging share prices. Even before Lehman’s fate has been sealed, there has been quiet finger pointing, with the Securities & Exchange Commission likely to come under increasing criticism. That’s because the SEC is supposed to monitor broker-dealers to ensure that they hold enough capital to support illiquid holdings such as Lehman’s real estate investments. But Lehman held these investments outside that entity, and thus avoided heavy capital charges to which regulators seemingly turned a blind eye. If the regulators refuse to offer a sweetheart deal to a potential buyer, it will change the trading dynamic around troubled financial institutions, creating uncertainty about what was becoming a safe one-way bet. So far, shareholders have been almost completely wiped out while debt holders have been protected.
I think Joint lead are crap!
same price as generic brand kitty litter - seems a little pricey…
It makes more sense for the UK banks to come in and try to poach the decent people. It’s not as if they are going to have to compensate them for lost bonuses…
there is something I don´t get: “a bid from the BofA-led group may involve losses for holders of the debt as well as shareholders. That would be a dramatic departure from recent deals where holders of debt were saved even as shareholders suffered heavy losses” how can you buy the company and not take all its debt? doesn´t it trigger an automatic bankruptcy and asset liquidation?
In the US we rarely do asset liquidations in corporate bankruptcies. In Europe, you do that. In the US we are the land of second chances so almost all bakruptcies are done through Chapter 11 which allows the company to keep operating. Even bankruptcies that involve liquidating the company are usually done this way. So I don’t exactly know the answer to the question but I suspect that the deal would need to be approved by the debt holders with a gun to their heads saying “take this or take your chances in bankruptcy court”. But I’m sure that a takeover of this kind with “failure to pay” would be a credit event for CDS.
JoeyDVivre Wrote: ------------------------------------------------------- > In the US we rarely do asset liquidations in > corporate bankruptcies. In Europe, you do that. > In the US we are the land of second chances so > almost all bakruptcies are done through Chapter 11 > which allows the company to keep operating. Even > bankruptcies that involve liquidating the company > are usually done this way. > > So I don’t exactly know the answer to the question > but I suspect that the deal would need to be > approved by the debt holders with a gun to their > heads saying “take this or take your chances in > bankruptcy court”. But I’m sure that a takeover > of this kind with “failure to pay” would be a > credit event for CDS. I think it is more a matter of size…you cannot let a global company to go through a bankruptcy court… a small example is Europe is Parmalat…
do you think it would also apply to structured notes, joey? thx a lot
So if BofA merged with LEH, would that make the ticker BLEH…?
bchadwick Wrote: ------------------------------------------------------- > So if BofA merged with LEH, would that make the > ticker BLEH…? LOL…
The treasury is now officially referred to as TREASIE MAE
strangedays Wrote: ------------------------------------------------------- > JoeyDVivre Wrote: > -------------------------------------------------- > ----- > > In the US we rarely do asset liquidations in > > corporate bankruptcies. In Europe, you do that. > > > In the US we are the land of second chances so > > almost all bakruptcies are done through Chapter > 11 > > which allows the company to keep operating. > Even > > bankruptcies that involve liquidating the > company > > are usually done this way. > > > > So I don’t exactly know the answer to the > question > > but I suspect that the deal would need to be > > approved by the debt holders with a gun to > their > > heads saying “take this or take your chances in > > bankruptcy court”. But I’m sure that a > takeover > > of this kind with “failure to pay” would be a > > credit event for CDS. > > > I think it is more a matter of size…you cannot > let a global company to go through a bankruptcy > court… a small example is Europe is Parmalat… LEH like Paramalat?! Do we think Fuld stole $1B?
JoeyDVivre Wrote: ------------------------------------------------------- > strangedays Wrote: > -------------------------------------------------- > ----- > > JoeyDVivre Wrote: > > > -------------------------------------------------- > > > ----- > > > In the US we rarely do asset liquidations in > > > corporate bankruptcies. In Europe, you do > that. > > > > > In the US we are the land of second chances > so > > > almost all bakruptcies are done through > Chapter > > 11 > > > which allows the company to keep operating. > > Even > > > bankruptcies that involve liquidating the > > company > > > are usually done this way. > > > > > > So I don’t exactly know the answer to the > > question > > > but I suspect that the deal would need to be > > > approved by the debt holders with a gun to > > their > > > heads saying “take this or take your chances > in > > > bankruptcy court”. But I’m sure that a > > takeover > > > of this kind with “failure to pay” would be a > > > credit event for CDS. > > > > > > I think it is more a matter of size…you > cannot > > let a global company to go through a bankruptcy > > court… a small example is Europe is > Parmalat… > > > LEH like Paramalat?! Do we think Fuld stole $1B? Doesnt matter if the money are stolen or not…the point is that the money are not there…any idea?