Lehman pre-announcement: The Brothers bear bad news
Lehman Brothers pre-released details of their earnings announcement originally scheduled for next Monday. The company attempted to soften the blow of a larger than expected $2.8 billion loss with the announcement of plans to raise $6 billion in capital.
For a company that has proclaimed its financial well-being in recent weeks, raising $6 billion in capital may not be viewed in the most positive light. The terms of the new issue are even less flattering. The company plans to raise $4 billion of those dollars through the issuance of 143 million shares of common stock.
Herein lies the problem: The new issue calls for 143 million shares valued at $4 billion, which is $27.97 per share BUT shares of Lehman closed above $32 on Friday. Why the 13% discount?
What message is sent to investors when a company values new shares less than existing ones? Not a good one, shares of Lehman Brothers were down over nine percent heading into mid-day trading hours.
Perhaps the June 16th announcement will shed more light on the recent developments.
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POSTED IN: Corporate, Earnings, Market, News, Uncategorized
1 opinion for Lehman pre-announcement: The Brothers bear bad news
profsilver
Jun 10, 2008 at 11:52 am
More on Lehman Brothers at http://www.digitalmoneyworld.com/should-we-be-worried-about-the-markets/
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