Lehman To Sell Neuberger Stake, Cut Dividend

Lehman Brothers Holdings Inc., reporting the biggest loss in its 158-year history, said it will sell a majority stake in its asset-management unit, spin off real-estate holdings, and cut the dividend in an effort to shore up capital and regain investor confidence.Lehman fell almost 7% in New York trading after posting a $3.9 billion third-quarter loss on $5.6 billion of writedowns, worse than the $2.2 billion loss analysts had predicted. The company said it’s auctioning off about 55% of the asset-management group, including fund-manager Neuberger Berman, and didn’t name potential bidders. The real-estate spinoff is expected to be completed in the first fiscal quarter of 2009, according to a statement yesterday.Pressure on Lehman’s chief executive officer, Richard Fuld, the longest-serving chief executive officer on Wall Street, mounted Tuesday after talks with Korea Development Bank ended, sending the shares tumbling 45%. Mr. Fuld is striving to convince investors that the fourth-largest American securities firm will stem losses as housing prices decline. He and his management team also must keep clients and employees from leaving the company.“Fuld is resolute and strong-willed, but that doesn’t make him right,” the president of Gutfreund & Co. in New York and former head of Salomon Brothers, John Gutfreund said in an interview. “You have one big asset in the money management business. Owning half of Neuberger doesn’t make a lot of sense to me.”Lehman declined 54 cents, or 6.9%, to $7.25 in New York Stock Exchange composite trading, as the cost to protect against a default by the firm rose. Credit-default swaps on Lehman jumped 100 basis points to 575 basis points, according to broker Phoenix Partners Group. That approached a previous peak of 580 basis points in March after the collapse and emergency sale of Bear Stearns Cos. to JPMorgan Chase & Co.“This is an extraordinary time for our industry and one of the toughest periods in the firm’s history,” Mr. Fuld, 62, said in the statement.The global credit-market meltdown has led to more than $510 billion of writedowns and credit losses since it began a year ago, sending financial shares around the world swooning. Lehman, the worst performer on the 11-company Amex Securities Broker/Dealer Index this year, has lost 89%.The New York-based securities firm moved its third-quarter financial report up a week after a person familiar with the matter said Tuesday that talks with state-owned Korea Development had ended, causing the stock to sink.“People are relieved that they have come out with some type of announcement,” the managing director at Eastern Investment Advisors in Boston, Rose Grant, said in a Bloomberg Radio interview yesterday. “That they are able to sell off certain divisions, get some more capital in here, I think that’s all a relief.”Lehman is “formally engaged with” BlackRock Inc., the biggest publicly traded American fund manager, to sell about $4 billion of the investment bank’s British residential mortgage holdings, according to yesterday’s statement. Lehman said the transaction would help reduce the firm’s stake in home mortgages by 47%.

Lehman To Sell Neuberger Stake, Cut Dividend

Lehman To Sell Neuberger Stake, Cut Dividend

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