Will Lehman’s (LEH) Erin Callahan try to blame Greenlight’s David Einhorn for this one?
Despite saying the last round of capital raising they did “wasn’t really necessary”, The WSJ reports that Lehman is about to hit up investor for another $5 billion.
Lehman “is close to raising more than $5 billion of fresh capital from an array of investors including the New Jersey Division of Investment, according to a person familiar with the matter.
The move comes as the firm is set to report a second-quarter loss of more than $2 billion, this person said. Until recently, most analysts who follow Lehman have been predicting a loss of about $300 million.
On Sunday afternoon, the firm was still pulling together final details of the capital raising, which could be announced Monday or Tuesday” according to the Journal.
The additional capital will be raised through the issue of common shares. With a market cap of $17 billion, Lehman is about to dilute shareholders by around 25% -30%, ouch.
Someone will pay for this and tops on the list are the face of the company, Erin Callahan. We are in a time now that if you say “A” and “E” happens, back up your desk. For Callahan, this will not only be the first but the second time she has told investors things are ok only to go out and raise billions soon after.
Doesn’t matter how well dressed you are, time to “look for other opportunities”. At least if she plays bridge she’ll have partners in Jimmy Cayne (Bear Stearns (BSC)), Chuck Prince (Citi (CC)), Ken Thompson (Wachovia (WB)), and Stan O’Neil (Morgan Stanley (MS)).
Soon or later these folks will learn, tell the truth, even if it isn’t pretty…
Disclosure (“none” means no position):None
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