By Kenneth Lim
Boston, April 1 - Lehman Brothers Holdings Inc. priced an upsized $4 billion offering of perpetual convertible preferred stock before the market open Tuesday at the midpoint of price talk with a dividend of 7.25% and an initial conversion premium of 32.5%.
The original size of the deal was $3 billion with an over-allotment option for an additional 450,000 shares, or $450 million, which has already been exercised.
Lehman Brothers Inc. was the bookrunner of the registered shelf offering.
The series P preferreds were sold at par of $1 apiece and a liquidation preference of $1,000 per preferred share. Price talk was for a dividend rate of 7% to 7.5% and an initial conversion premium of 30% to 35%.
The preferreds are non-callable for the first five years and have a mandatory conversion after five years, subject to a 130% hurdle.
The convertibles have standard dividend and takeover protection and net-share settlement.
Lehman Brothers, a New York-based investment bank, said the proceeds of the deal will be used to bolster its capital and increase financial flexibility.
| Issuer: | Lehman Brothers Holdings Inc.
|
| Issue: | Series P convertible preferred stock
|
| Amount: | $4 billion, including greenshoe
|
| Greenshoe: | $450 million, already exercised
|
| Maturity: | Perpetual
|
| Bookrunner: | Lehman Brothers Inc.
|
| Dividend: | 7.25%
|
| Price: | Par of $1.00
|
| Liquidation preference: | $1,000
|
| Yield: | 7.25%
|
| Conversion premium: | 32.5%
|
| Conversion price: | $49.87
|
| Conversion ratio: | 20.0509
|
| Call: | Non-callable before April 1, 2013
|
| Mandatory conversion: | From April 1, 2013, subject to 130% hurdle
|
| Dividend protection: | Yes
|
| Net-share settlement: | Yes
|
| Pricing date: | April 1, before the open
|
| Distribution: | Registered
|
| Price talk: | 7%-7.5%, up 30%-35%
|
| Stock symbol: | NYSE: LEH
|
| Stock price: | $37.64 at close of March 31
|
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