Lehman Brothers gets OK to monetize minority equity in Neuberger for $1.5 billion

By Lisa Kerner

Charlotte, N.C., Dec. 14 - Lehman Brothers Holdings Inc. announced that judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York approved the monetization of its 48% minority equity interest in Neuberger Berman Group LLC.

The sale to Neuberger Berman will give Lehman about $1.5 billion in total proceeds, almost double what would have been generated by a 2008 offer, a company news release said.

Neuberger Berman and its employees will purchase common equity held by the Lehman estate over the next five years. Neuberger Berman employees, who led a buyout of the firm in May 2009, currently own about 52% of the common equity.

As previously reported, Lehman had eyed a sale of Neuberger Berman and its investment management business before the bankruptcy case began. The company negotiated a stalking-horse offer in October 2008 that would have yielded $745 million.

An alternative strategy developed in late 2008 led to Lehman and some of its non-debtor affiliates receiving 93% of the preferred equity with a face value of $814 million and 49% of the common equity in the newly formed Neuberger Berman Group LLC.

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 under Chapter 11 case number 08-13555.

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