Lehman Brothers unit enters commitment for £650 million transaction

By Caroline Salls

Pittsburgh, Oct. 1 - The joint administrators of LB Holdings Intermediate 2 Ltd. (LBHI2) said that the company has entered into a commitment letter with Elliott Management Corp., King Street Capital Management, LP and Lehman Brothers Holdings Inc. in connection with the claims of LBHI2 in the estate of Lehman Brothers International (Europe) (LBIE).

According to a Lehman Brothers Holdings news release, the transaction calls for a £650 million initial payment to LBHI2, along with the right to receive future contingent sums.

In turn Elliott and King Street, alongside LBHI2, will acquire rights connected to all of LBHI2's claims against LBIE.

Also under the transaction, LBHI2 will share in specified claims against the LBIE estate held by Elliott and King Street.

"I believe that the transaction represents an excellent outcome for the creditors of LBHI2," joint administrator Derek Howell said in the release.

"Working closely with Elliott and King Street, I am hopeful that it will lead to an early resolution of the outstanding issues between LBHI2, Lehman Brothers Limited and LBIE which, in turn, may serve to expedite the final resolution of all three administrations."

LBHI2 is the holder of the subordinated debt in LBIE. Lehman Brothers Holdings is the ultimate shareholder and indirect significant majority creditor of LBHI2. Elliott and King Street are significant creditors of LBIE.

New York-based Lehman Brothers Holdings Inc. was the fourth-largest investment bank in the United States. The company emerged from bankruptcy on March 6, 2012.

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