New Issue: Lehman prices $40 million notes linked to Morgan Stanley at 2%, up 23.75%

By Jennifer Chiou

New York, Feb. 27 - Lehman Brothers Holdings Inc. priced $40 million of 2% notes due March 3, 2009 performance linked to Morgan Stanley stock with a 23.75% initial exchange premium, according to a 424B5 filing with the Securities and Exchange Commission.

The notes have a cash or stock payout at maturity linked to Morgan Stanley and can be converted at any time for stock at the holder's option.

Issuer:	Lehman Brothers Holdings Inc.
Issue:	Performance-linked medium-term senior series H notes
Underlying stock:	Morgan Stanley
Amount:	$40 million
Greenshoe:	$6 million
Maturity:	March 3, 2009
Coupon:	2%, payable semiannually
Price:	Par
Yield:	2%
Exchange premium:	23.75%
Exchange price:	$75.4875
Payout at maturity:	Greater of par in cash or percentage appreciation above exchange price (23.75% above $60.00 price Lehman paid to hedge notes), in cash or stock at Lehman's option
Pricing date:	Feb. 24
Settlement date:	March 8
Underwriter:	Lehman Brothers
Distribution:	Off shelf

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