Lehman Special Financing receives $17.5 million in swap settlement

By Caroline Salls

Pittsburgh, Oct. 1 - Lehman Brothers Special Financing Inc. has entered into a $17.5 million claim settlement with Primus Guaranty, Ltd. subsidiary Primus Financial Products, LLC, according to an 8-K filed Friday with the Securities and Exchange Commission.

At the time of the agreement, Primus Financial had $1.1 billion of credit default swaps outstanding with Lehman.

Primus said five reference entities in this portfolio with a principal of $66 million had suffered credit events over the course of the last two years, and Lehman had failed to pay $16 million in premiums to Primus at the time of settlement.

According to the 8-K, the mark-to-market value of the portfolio, together with the settlement prices of the credit default swaps that suffered credit events, totaled $54.4 million in favor of Lehman Brothers Special Financing.

To terminate all credit swaps and settle all outstanding claims, Primus Financial paid $17.5 million to the Lehman entity.

New York-based Lehman Brothers Holdings was the fourth-largest investment bank in the United States. The company filed for bankruptcy on Sept. 15, 2008 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 08-13555.

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