New Issue: Lehman prices $850,000 21.51% reverse exchangeables linked to Elan

By Angela McDaniels

Seattle, June 5 - Lehman Brothers Holdings Inc. priced an $850,000 issue of reverse exchangeable notes due Sept. 7, 2007 linked to American Depositary Shares representing the common stock of Elan Corp. plc, according to a 424B2 filing with the Securities and Exchange Commission.

The three-month notes will pay 5.3775% for an annualized rate of 21.51%. Interest is payable monthly.

The payout at maturity will be par unless Elan ADSs fall below the trigger price of $13.881 during the life of the notes and finish below the initial ADS price of $19.83, in which case the payout will be a number of Elan ADSs equal to $1,000 divided by the initial ADS price or, at Lehman's option, the equivalent cash value.

Lehman Brothers Inc. is the underwriter.

Issuer:	Lehman Brothers Holdings Inc.
Issue:	Reverse exchangeable notes
Underlying stock:	Elan Corp. plc
Amount:	$850,000
Maturity:	Sept. 7, 2007
Coupon:	21.51%, payable monthly
Price:	Par
Payout at maturity:	If Elan falls below the trigger price during the life of the notes and finishes below the initial ADS price, 50.42864 Elan ADSs or the equivalent cash value; otherwise, par
Initial ADS price:	$19.83
Trigger price:	$13.881, 70% of the initial ADS price
Pricing date:	June 4
Settlement date:	June 7
Underwriter:	Lehman Brothers Inc.
Fees:	1.55%

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