Prompted by a precipitous plunge in its share value, Lehman Brothers Holdings Inc. this morning released its preliminary third-quarter results a week early and announced plans sell a majority stake in its investment management division and spin off most of its commercial real estate assets.
The beleaguered investment bank expects to post a net loss of $3.9 billion, or $5.92 per share, during the third quarter ended Aug. 31., attributed to “weak sales and write-downs of commercial real estate assets and a slower real estate environment,” according to Lehman chairman and chief executive Richard Fuld.
That compares with net income of $887 million, or $1.54 per share, during the third quarter of 2007.
The company also posted a mark-to-market loss of $7.8 billion.
New York-based Lehman also slashed its dividend to 5 cents per share from 68 cents in a move that will enable the company to retain $450 million on an annual basis.
The company also expressed its intention to sell off an estimated 55% of its investment management division, which includes its asset management, private-equity and wealth management businesses.
The spin-off will exclude its middle-market institutional distribution business and its minority stakes in outside hedge fund managers.
Its investment management unit is expected to post net revenue of $600 million, down from $800 million during the fiscal third quarter of 2007.
Additionally, the company also plans to spin off the majority of its commercial real estate assets, which are valued at between $25 billion and $30 billion, into a new separate publicly company, Real Estate Investments Global, during the fiscal first quarter of 2009, leaving the company with “limited” commercial real estate exposure.
In another move, the company is selling $4 billion of its U.K. residential mortgage portfolio to BlackRock Financial Management Inc. of New York.
The announcement comes one day after Lehman’s shares plummeted $6.36, or 45%, to close at $7.79 per share, following reports that talks with Seoul, South Korea-based Korea Development Bank had broken down and that the company had been unable to raise capital.
Lehman had been expected to post its earnings on Sept. 18.
No comments:
Post a Comment