Lehman Brothers, R3 Capital close interest repurchase settlement

By Caroline Salls

Pittsburgh, Oct. 20 - Lehman Brothers Holdings, Inc. and R3 Capital Management, LLC have closed on a settlement agreement that calls for the repurchase of Lehman Brothers' minority interest in the general partner of R3 Capital and its limited partner investment in its investment fund, according to an R3 news release.

The transaction was approved by the U.S. Bankruptcy Court for the Southern District of New York on Thursday.

"We are very pleased to have resolved all of our outstanding issues with Lehman," R3 Capital president and chief executive officer Rick Rieder said in the release.

"With this settlement now behind us, we look forward to re-focusing on the myriad investment opportunities presented by the current credit-related dislocations in the world's financial markets."

According to the release, Lehman Brothers' general partner and limited partner stakes were repurchased in exchange for $250 million in cash plus a new $250 million limited partner investment in R3 Capital's investment fund.

R3 said the new $250 million limited partner investment is a passive investment with no special rights and cannot be withdrawn until May 31, 2011.

As part of the settlement, Lehman Brothers has agreed to release all potential claims against R3 Capital.

New York-based Lehman Brothers Holdings, the fourth largest U.S. investment bank, filed for bankruptcy on Sept. 15. Its Chapter 11 case number is 08-13555.

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