Investors can’t get enough Lehman stock
Lehman Brothers (LEH) is raising a big pile of cash. The brokerage firm, whose shares have been whipsawed in recent weeks amid rumors that it might come under attack from short-sellers questioning its liquidity and the strength of its balance sheet, said Monday afternoon it will sell 3 million convertible preferred shares. With the shares carrying a liquidation preference of $1,000 each, Lehman could raise $3 billion or more in the offering. The firm, which has stressed that it has a much stronger cash position than its rival Bear Stearns (BSC), said the proceeds will help bolster its capital and increase flexibility.
Lehman finance chief Erin Callan said the sale should help the firm reduce leverage, a much desired outcome in a market that has been tough on bond investors that overreached. “We also felt this was the right time as there was a window of opportunity in the market,” she said, “as we have received significant interest from several key institutional investors, who have been strong supporters of the firm over time.” Lehman doubters, take note: The firm is selling stock only because investors were asking for it.
Stocks holders have always shown themselves to have more demanding sovency criteria than lenders? Of course
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This convertible itself is an admission of trouble at Lehman.