Lehman had no trouble selling its convertible preferred stock. They opted to raise $4 billion instead of the initial $3 billion due to excessive demand for the issue. According to the press release, the convertible preferred will pay 7.25% and will be convertible at any time into 20.0509 shares of Lehman's common stock, which represents an initial conversion price of approximately $49.87. The market likes this news as Lehman is up $3 in pre-market trading. While this should help squash rumors of liquidity problems at Lehman, it makes me wonder why they would borrow 7.25% money when they can get unlimited amounts from the discount window at 2.5%? But they don't call me a skeptic for nothing.
Thornburg managed to price the $1.35 billion it promised to raise to meet margin calls to its other lenders. This is actually only marginally good news. While the money will help the company stave off bankruptcy, it will cause the common shareholders to end up owning only around 5% of the company. So instead of paying $1.5 for the stock, you'd probably have to pay me to buy it.
That is most of the good news I see. In the bad news department, UBS will take a $19 billion write-down and can its CEO. Meanwhile,Deutsche Bank is writing down $3.9 billion and stating that "conditions have become significantly more challenging during the last few weeks." Futures are up so the market is back on "the crisis is over" mode. We'll see how long it lasts this time...
Tuesday, April 1, 2008
Subscribe to:
Post Comments (Atom)
1 comment:
this shows that the credit crisis has passed its nadir. looking forward to summer '08. i will go play golf with all the other finance people who will be doing M&A deals & structuring special investment vehicles & writing mortgages & collecting fees. it will be fun.
Post a Comment