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jjyu
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Why is Lehman in a hurry to look for a buyer?

September 12th, 2008, 8:56 pm

As of two days ago they appeared to have enough cash to last for a while. What is the reason behind their rush to look for a buyer within a few days apart (or the activity has been greatly intensified.) ?Any thought on this?
 
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TraderJoe
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Why is Lehman in a hurry to look for a buyer?

September 12th, 2008, 10:13 pm

Have you tried this thread?
 
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jjyu
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Why is Lehman in a hurry to look for a buyer?

September 13th, 2008, 12:52 am

...well, that side of the brain controls speech, not thinking.
 
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quantmeh
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Why is Lehman in a hurry to look for a buyer?

September 13th, 2008, 1:42 am

QuoteOriginally posted by: jjyuAs of two days ago they appeared to have enough cash to last for a while. they all put a brave face, but in reality people were talking about LEH bail out since at least March.
 
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jjyu
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Why is Lehman in a hurry to look for a buyer?

September 13th, 2008, 2:07 am

We know it has a sizable portfolio of CMBS. It's not pretty, but do you think it should be on the block?What is it then? Too tired to think?
 
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KackToodles
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Why is Lehman in a hurry to look for a buyer?

September 13th, 2008, 5:30 am

they have to find a buyer before the next big bank cuts in line in front of them.
 
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Traden4Alpha
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Why is Lehman in a hurry to look for a buyer?

September 13th, 2008, 10:44 am

QuoteOriginally posted by: jjyuWe know it has a sizable portfolio of CMBS. It's not pretty, but do you think it should be on the block?But who will pay LEH for its CMBS anything close to the market-to-model price that LEH put on those assets? That's why they were looking to sell "good" assets such as Neuberger. But even with those assets, no one was will to pay enough to give LEH the cushion it needs to cover its liabilities and further write-downs of distressed assets.
Last edited by Traden4Alpha on September 12th, 2008, 10:00 pm, edited 1 time in total.
 
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TraderJoe
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Why is Lehman in a hurry to look for a buyer?

September 13th, 2008, 10:49 am

QuoteOriginally posted by: jjyuWe know it has a sizable portfolio of CMBS. It's not pretty, but do you think it should be on the block?What is it then? Too tired to think?Maybe it's because the staff bonus pool at Lehman Brothers could now be worth more than the firm itself following a collapse in the bank’s share price over the last two days.Are you in denial? (Maybe you think too much).
 
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jjyu
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Why is Lehman in a hurry to look for a buyer?

September 13th, 2008, 1:33 pm

They set aside 6B for bonus before this event become public. I dont know if they can keep that figure or if the firm remains as is by the year end. What I tried to sort out is what happen to their balance sheet if they are unable to unload that 40B CMBS, or sold them at the deep discount. By looking at the intensity of looking for a buyer (or sell piece of the firm), I dont know if the balance sheet concern is the cause because that can wait, right? ... My take is ... if other banks are willing to trade with them, they can stay in business as long as they can finance the activities. The urgency of selling the firm led me feel they may not be able to finance the normal business activity much longer. Correct me if you see something different.
 
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KackToodles
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Why is Lehman in a hurry to look for a buyer?

September 13th, 2008, 11:03 pm

QuoteOriginally posted by: jjyuThey set aside 6B for bonus before this event become public. I dont know if they can keep that figure Any bonus, unless specifically guaranteed and vested by written contract, will be wiped out. the only thing workers usually are entitled to in a bankruptcy is their guaranteed severance pay as stipulated by the fine print in their contracts (or by state law).
Last edited by KackToodles on September 13th, 2008, 10:00 pm, edited 1 time in total.
 
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Anselmus
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Why is Lehman in a hurry to look for a buyer?

September 14th, 2008, 11:01 am

Since the beginning of the year I told you Leh will go bust (or be merged in a hostile takeover). In June I said:"Subprime writedowns are mostly done but1) no revenue from structured products in near future2) I expect heavy lawsuits against rating agencies and i-banks - thats not discounted so far3) I expect swap curve to remain heavily inverse - that generates natural losses4) The brand Leh have suffered so far that they lose a lot business - that will continue"Aspect 4 cannot be overstated as about 50% of their funding takes place via Repo. Of course, if you are so much in the news even the most stupid guy on earth is worried about counterpart risk and reduces his exposure to Lehman. So you have some problem from the funding side (they are of course benefitting a lot from the primary dealer credit facility). However, the most important aspect is simply leverage. The public never understand how leveraged these banks are. Roughly about 25 (GS a lot less)!!! Thats crazy. And when your 5yr CDS is about 500bps plus, you are in big shit to rollover your maturing bonds. This is the core problems but most guys simply don't see it (this week I read the first time from someone official who gets it - "Citi research- Are the Brokers broken?").
 
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penguina
Posts: 174
Joined: August 17th, 2008, 11:36 pm

Why is Lehman in a hurry to look for a buyer?

September 14th, 2008, 11:21 am

QuoteOriginally posted by: AnselmusSince the beginning of the year I told you Leh will go bust (or be merged in a hostile takeover). In June I said:"Subprime writedowns are mostly done but1) no revenue from structured products in near future2) I expect heavy lawsuits against rating agencies and i-banks - thats not discounted so far3) I expect swap curve to remain heavily inverse - that generates natural losses4) The brand Leh have suffered so far that they lose a lot business - that will continue"Aspect 4 cannot be overstated as about 50% of their funding takes place via Repo. Of course, if you are so much in the news even the most stupid guy on earth is worried about counterpart risk and reduces his exposure to Lehman. So you have some problem from the funding side (they are of course benefitting a lot from the primary dealer credit facility). However, the most important aspect is simply leverage. The public never understand how leveraged these banks are. Roughly about 25 (GS a lot less)!!! Thats crazy. And when your 5yr CDS is about 500bps plus, you are in big shit to rollover your maturing bonds. This is the core problems but most guys simply don't see it (this week I read the first time from someone official who gets it - "Citi research- Are the Brokers broken?").good pointssubprime writedowns may be almost done but alt-A and prime certainly are not.
 
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Siberian
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Joined: June 25th, 2003, 8:56 pm

Why is Lehman in a hurry to look for a buyer?

September 15th, 2008, 1:02 pm

now you have got your answer...
 
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trackstar
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Joined: August 28th, 2008, 1:53 pm

Why is Lehman in a hurry to look for a buyer?

September 15th, 2008, 1:07 pm

They have filed for reorg (Ch 11) not liquidation (Ch 7).Media is not making the distinction.
 
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jfuqua
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Why is Lehman in a hurry to look for a buyer?

September 15th, 2008, 1:34 pm

Bankruptcy has come to mean alot of things [mostly re-org] but the NYT 9/14 says the following which seems to be how analysts see it, despite it being Chapter 11."Lehman’s filing is unlikely to resemble those of other companies that seek bankruptcy protection. Because of the harsher treatment that federal bankruptcy law applies to financial-services firms, Lehman cannot hope to reorganize and survive. It was not clear whether the government would appoint a trustee to supervise Lehman’s liquidation or how big the financial backstop would be."
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