Lehman debtor looks to buy $931.52 million of notes issued by Pine CCS

By Caroline Salls

Pittsburgh, March 24 - Lehman Brothers Holdings Inc. and its Lehman Commercial Paper Inc. debtor requested court approval of Lehman Commercial Paper's purchase of $927.43 million of class A-1 notes from Barclays Bank plc, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The notes were issued by Pine CCS Ltd.

Under a note sale and termination agreement, Lehman Commercial Paper will purchase the Barclays notes for $805 million.

The company said a majority of the purchase price will consist of amounts currently held by U.S. Bank on behalf of Pine and restricted cash collected by Lehman Commercial Paper on the underlying assets on behalf of Pine.

In addition, the Lehman debtors are seeking court approval of Lehman Commercial Paper's purchase from Lehman Brothers Holdings of $4.09 million of the class A-1 Pine notes at par plus interest.

In connection with this transaction, Lehman Brothers Holdings will also release its security interest in the class A-2 notes, class B notes and subordinated notes issued by Pine.

According to the release, the acquisition of the Barclays notes and the Lehman Brothers Holdings notes will result in Lehman Commercial Paper owning all of the notes issued by Pine.

In order to ease the administration and maximize the value of underlying assets after Lehman Commercial Paper acquires all of the notes, a related Pine securitization will be terminated.

Lehman said the purchase of the Barclays notes under the sale and termination agreement is part of ongoing settlement discussions between Lehman and Barclays, which includes the resolution of issues related to derivative contracts between Lehman Brothers Special Financing and Ceago ABS CDO 2007-1, Ltd.

The company said Lehman Commercial Paper sold participations in commercial loans to Pine in order to increase liquidity. Lehman Commercial Paper remained the lender of record for most of the underlying assets.

In turn, Pine issued securities, comprising both notes tied to debt and equity interests in Pine, in various classes. These notes are secured by the underlying assets and the cash flow from those assets.

A hearing is scheduled for April 13.

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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