In a first on Fast Money report, CNBC's Maria Bartiromo reveals exclusive new details about the Lehman plan to issue $3 billion in convertible preferred shares.
Erin Callan the CFO of Lehman provided Bartiromo with the details in an exclusive interview.
Specifically, Bartiromo says the deal is already sold. The investors are large institutional investors according to Bartiromo, “and long time supporters of the firm.”
“Here are the terms,” she adds. “It’s a dividend yield of between 7% – 7.5% and the price being paid will be a premium between 30% – 35% on the stock. This gets rid of execution risk,” she says, “because it’s long term investors in the firm and it’s sold already.”
Lehman Brothers became the latest bank to take steps to shore up its funding after markets closed Monday, announcing that it will issue $3 billion of convertible preferred shares.
Lehman had been beset by rumors of not having enough funding since the demise of Bear Stearns. But the bank says it has over $200 billion of assets it could sell or borrow against, and that its ability to borrow from the Federal Reserve should dispel questions about its solidity.
Lehman's shares fell nearly 5 percent in aftermarket trading after the planned offering was announced.
"It appears to me that stock is trading down (after hours) because investors don’t see the details. Lehman is not looking for money from overseas sovereign funds," Bartiromo explains. "They’re basically announcing a deal that’s already sold."
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