Lehman Brothers: court approves Broadway property, Ginnie Mae, Latshaw Drilling agreements

By Lisa Kerner

Charlotte, N.C., June 15 - Lehman Brothers Holdings Inc. had three separate agreements/transactions approved by the U.S. Bankruptcy Court for the Southern District of New York on Wednesday, according to an attorney familiar with the company and its cases.

The court approved an agreement under which a defaulted former office building property on Broadway will be sold for $161.5 million to stalking horse bidder 1107 Broadway Owner LLC at auction for $161.5 million for the property, plus transfer taxes and carry costs incurred by Lehman.

If 1107 Broadway Owner is not the high bidder at auction, it will receive a $2.5 million break-up fee to be paid from sale proceeds.

The auction will be held on June 29. Interested bidders must make a $5 million deposit toward the purchase price.

The third-party bids must be for at least $164.5 million, plus payment of transfer taxes and carry costs. Subsequent bids at auction must be made in minimum increments of $250,000.

Lehman bought the property in October 2007 with plans to turn the former office building into 165 luxury condominium units.

Ginnie Mae portfolio sale

Lehman Brothers' request to sell two portfolios of Government National Mortgage Association (Ginnie Mae) reverse mortgage loans to MetLife Home Loans for an estimated $43.42 million was also approved.

The fixed-rate and floating-rate reverse home equity conversion mortgage loans were acquired by Lehman from indirect subsidiary Aurora Bank FSB that Aurora had previously acquired from MetLife's predecessors in interest.

Lehman sold participation interests in the loans, which were securitized under a Ginnie Mae program.

Latshaw Drilling claim settlement

The court approved a claim settlement with Lehman Brothers debtor Lehman Commercial Paper Inc., Latshaw Drilling Co., LLC and Latshaw Drilling and Exploration Co., Inc.

Lehman Commercial Paper was responsible for funding 75% of a $100 million credit agreement with the Latshaw entities.

Latshaw had borrowed $63 million under the loan as of Sept. 17, 2008 and was not able to draw the remaining available balance on Lehman's bankruptcy filing date. Lehman Commercial Paper said it did not fund its share of the balance.

In February 2010 Lehman Commercial Paper filed a $45.85 million claim against the Latshaw entities for principal, interest, costs, fees and expenses due under the credit agreement.

Under the settlement agreement, the Lehman Commercial Paper claim will be allowed in a reduced amount, which was not specified in its motion.

Latshaw will be excused from making interest payments on the restructured credit agreement for one year, and some covenant restrictions will be modified so that Latshaw can use specified free cash for capital expenditures in excess of those permitted under the credit agreement.

On the settlement effective date, Lehman Commercial Paper will receive a lump-sum payment for payments deposited in escrow under Latshaw's own Chapter 11 plan as well as subsequent additional payments to satisfy its claim over the term of the restructured credit agreement.

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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