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Lehman looks to buy notes from Bankhaus unit for $957 million
By Caroline Salls
Pittsburgh, March 2 - Lehman Brothers Holdings Inc. requested court approval of two note purchase agreements with the insolvency administrator of Lehman Brothers Bankhaus AG, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.
Under the agreements, Lehman would purchase $1.54 billion of notes from Bankhaus for a total purchase price of $957 million.
The notes were issued by special purpose entities SASCO 2008-C2 Ltd., Spruce CCS, Ltd. and Verano CCS, Ltd. The issuers bought real estate, commercial loans and equity positions from the Lehman debtors and issued the notes, which were secured by the assets and related cash flow.
Some of the notes were sold to Bankhaus by the Lehman debtors under repurchase agreements.
Lehman said it has decided that considerable value could be realized by purchasing the notes held by Bankhaus at a $586 million discount to the principal amount outstanding to give Lehman a opportunity to realize significant long-term recoveries.
In addition, the company said maximum value can only be achieved through its active management of the underlying assets. Lehman said Bankhaus' ownership of some of the notes makes asset management difficult.
Lehman said the purchase of the notes would also enable it to control the capital structures of the issuers and unwind or dissolve them.
A hearing is scheduled for March 23.
New York-based Lehman Brothers Holdings Inc. was the fourth-largest investment bank in the United States. The company filed for bankruptcy on Sept. 15, 2008. Its Chapter 11 case number is 08-13555.
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