New Issue: Lehman prices $10 million 3.119% notes linked to Microsoft

By Jennifer Chiou

New York, May 31 - Lehman Brothers Holdings Inc. priced $10 million of 3.119% notes due June 15, 2009 performance-linked to Microsoft Corp. stock, according to a 424B5 filing with the Securities and Exchange Commission.

Payout at maturity will be par plus any percentage increase over the threshold price of $30.836, which is 130% of the price Lehman paid to hedge the notes. The payout will have a floor of par and will be payable in cash or stock at Lehman's option.

Issuer:	Lehman Brothers Holdings Inc.
Issue:	Performance-linked medium-term senior notes
Underlying stock:	Microsoft Corp.
Amount:	$10 million
Greenshoe:	$1.5 million
Maturity:	June 15, 2009
Coupon:	3.119%
Price:	Par
Exchange premium:	30% (over $23.72 that Lehman paid to hedge the notes)
Exchange price:	$30.836 (automatic exchange at maturity if more valuable)
Pricing date:	May 31
Settlement date:	June 5
Underwriter:	Lehman Brothers

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