Lehman Close To Raising $5 Billion, Face $2 Billion in Losses
Lehman Brothers is close to raising $5 billion in fresh capital and could book a loss of more than $2 billion in the second-quarter, The Wall Street Journal reported citing unnamed sources.
Most analysts have been predicting a loss of about $300 million, the report said. It also named the New Jersey Division of Investment as one of the possible investors.
Lehman is expected to pre-announce its quarterly results this week and provide details of how it plans to raise capital, CNBC reported last week. The company is talking with U.S. investors about raising capital, including existing shareholders and possibly private equity companies.
Lehman has traditionally released its earnings for the second quarter during the week of June 16.
During its earnings announcement, the firm is expected provide details on its recent effort to "deleverage," or massively reduce the amount of money it borrows from outside sources to fund operations.
An internal Lehman memo obtained by CNBC shows that Lehman has reduced its levearge up to 25 percent over the last quarter. The memo also said that Lehman was buying back only small amounts of stock as part of a regular buyback program. Newspaper reports stated that the recent spike in shares of Lehman was the result of a recent massive buyback effort.
Shares of Lehman are down 48 percent on the year.