Lehman to price 17.25% reverse convertibles linked to Apple

By Angela McDaniels

Seattle, Sept. 27 - Lehman Brothers Holdings Inc. plans to price reverse convertible notes due April 11, 2008 linked to the common stock of Apple Inc., according to an FWP filing with the Securities and Exchange Commission.

The six-month notes will pay 8.625% for an annualized rate of 17.25%. Interest will be payable monthly.

The payout at maturity will be par unless Apple stock falls by more than 20% during the life of the notes and the final share price is less than the initial share price, in which case the payout will be a number of Apple shares equal to $1,000 divided by the initial share price or, at Lehman's option, the equivalent cash value.

The notes are expected to price on Oct. 5 and settle on Oct. 11.

Lehman Brothers Inc. will be the underwriter.

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