================================================================= LEHMAN BROTHERS BANKRUPTCY NEWS Issue Number 3 ----------------------------------------------------------------- Copyright 2008 (ISSN XXXX-XXXX) September 17, 2008 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 215-945-7000 FAX 215-945-7001 ----------------------------------------------------------------- LEHMAN BROTHERS BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 572 Fernwood Lane, Fairless Hills, Pennsylvania 19030, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtor's cases. New issues are prepared by Randy T. Antoni, Psyche S. Castillon, Carlo B. Fernandez, Frauline S. Abangan and Peter A. Chapman, Editors. Subscription rate is US$45 per issue. Any re-mailing of LEHMAN BROTHERS BANKRUPTCY NEWS is prohibited. ================================================================= IN THIS ISSUE ------------- [00027] DEBTOR'S MOTION FOR RULING ON $138-BIL. ADVANCES BY CHASE [00028] ADVANCES TO LEHMAN BROS. INC. REPAID BY FEDERAL RESERVE [00029] LB 745 LLC JOINS LEHMAN HOLDINGS IN CHAPTER 11 [00030] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CH. 11 CASES [00031] DEBTOR'S APPLICATION TO EMPLOY EPIQ AS NOTICE AGENT [00032] DEBTOR'S MOTION TO ENFORCE AUTOMATIC STAY ON CREDITORS [00033] DEBTOR'S MOTION TO EXTEND DEADLINE TO FILE SCHEDULES [00034] BARCLAYS INKS $1.75B DEAL TO BUY KEY LEHMAN'S U.S. UNITS [00035] DEBTOR'S MOTION TO WAIVE ASSET & DEBT INFO. IN PETITION [00036] DEBTOR'S MOTION TO WAIVE LIST OF CREDITORS IN PETITION [00037] LEHMAN MULLS SALE OF INVESTMENT MGT. UNIT TO BAIN/HELLMAN [00038] SIPC DOES NOT EXPECT LEHMAN BROTHERS INC. LIQUIDATION [00039] LINKLATERS TO ADVISE PWC IN LEHMAN U.K. ADMINISTRATION [00040] LEHMAN BROTHERS' JAPAN UNITS FILE FOR BANKRUPTCY [00041] JAPAN BANKS & INSURERS HAVE $2.3BIL. EXPOSURE TO LEHMAN [00042] SINGAPORE EXCHANGE BANS LEHMAN FROM TAKING NEW SECURITIES [00043] KOREA HALTS LEHMAN OPERATIONS; BANKS HAVE $720M EXPOSURE [00044] TAIWAN SUSPENDS LEHMAN; INVESTORS MAY SEEK DAMAGES [00045] INDIA STAYS LEHMAN OPERATIONS; FIRMS LOSE $431 MILLION [00046] METLIFE HAS $800-MIL. EXPOSURE TO LEHMAN AND AIG [00047] CANADA'S MANULIFE HAS $395-MIL. EXPOSURE TO LEHMAN [00048] JAPAN'S SHINSEI HAS $358-MIL. EXPOSURE TO LEHMAN [00049] SUN LIFE HAS $349-MIL. EXPOSURE TO LEHMAN BROTHERS [00050] BANK OF CHINA HAS $50-MIL. EXPOSURE TO LEHMAN [00051] ING HAS EUR200M EXPOSURE, SEES EUR100M IMPACT ON INCOME [00052] S&P DOWNGRADES LEHMAN BROTHERS HOLDINGS TO "D" [00053] S&P PLACES 3 CMBS DEALS ON NEG. WATCH DUE TO EXPOSURE [00054] A.M. BEST DOWNGRADES LEHMAN RE BERMUDA TO "bb" [00055] FEDERAL RESERVE TURNS BACK ON LEHMAN BUT SAVES AIG KEY DATE CALENDAR ----------------- 09/15/08 Voluntary Petition Date 09/16/08 Organizational Meeting to Form Creditors' Committees 10/15/08 Deadline to Provide Utilities with Adequate Assurance 10/31/08 Deadline to Provide Initial Summary Financial Info. 11/14/08 Deadline to File Schedules of Assets and Liabilities 11/14/08 Deadline to File Statement of Financial Affairs 11/14/08 Deadline to File Lists of Contracts and Leases 12/14/08 Deadline to Remove Actions Pursuant to F.R.B.P. 9027 01/13/09 Expiration of Debtor's Exclusive Plan Proposal Period 01/13/09 Deadline to Make Decisions About Lease Dispositions 03/14/09 Expiration of Debtor's Exclusive Solicitation Period 09/15/10 Deadline for Debtor's Commencement of Avoidance Actions First Meeting of Creditors under 11 USC Sec. 341 Bar Date for filing Proofs of Claim ----------------------------------------------------------------- [00027] DEBTOR'S MOTION FOR RULING ON $138-BIL. ADVANCES BY CHASE ----------------------------------------------------------------- [00028] ADVANCES TO LEHMAN BROS. INC. REPAID BY FEDERAL RESERVE ----------------------------------------------------------------- Lehman Brothers Holdings, Inc., sought and obtained confirmation from the U.S. Bankruptcy Court for the Southern District of New York regarding the status and treatment of transfers amounting to $138 billion made by JPMorgan Chase Bank, N.A., to Lehman Brothers, Inc. Lehman Brothers Inc., a non-Debtor subsidiary of Lehman Brothers Holdings, is a registered broker-dealer with the Securities and Exchange Commission. JPMorgan Chase Bank is party to five clearing agreements with Debtor and certain of its affiliates: (A) the Clearance Agreement executed by Chase as of June 15, 2000 and executed by the Debtor, LBI, Lehman Commercial Paper Inc., Lehman Brothers International (Europe), Lehman Brothers OTC Derivatives Inc., and Lehman Brothers Japan Inc. as of June 7, 2000; (B) the Clearance Agreement, dated as of September 10, 2008, with Lehman Brothers Bank, FSB; (C) the Clearance Agreement, dated as of September 10, 2008, with Lehman Brothers Bankhaus Aktiengesellschaft; (D) the Clearance Agreement, dated as of September 10, 2008, with Lehman Brothers Commercial Bank; and (E) the Global Custody and Clearance Agreement, dated March 14, 2001, with LBI, and together with the June 2000 Clearance Agreement. Harvey R. Miller, Esq., at Weil, Gotshal & Manges LLP, in New York, says pursuant to the June 2008 Clearance Agreement, the September 2008 Clearance Agreements and the Global Clearance Agreement, Chase may, in its sole discretion, make advances to or for the benefit of the respective Lehman Clearance Parties, which advances are payable by the Lehman Clearance Parties upon demand by Chase. Mr. Miller says further that the obligations of the Lehman Clearance Parties under the Clearance Agreements are guaranteed by Lehman pursuant to: (1) the Guaranty, dated as of August 26, 2008, by the Debtor in favor of Chase and its successors and assigns; and (2) the Guaranty, dated as of September 9, 2008, made by the Debtor in favor of Chase and its affiliates, subsidiaries, successors, and assigns. According to Mr. Miller, the Debtor's obligations under the Guarantee Agreements are secured by collateral, including all its proceeds, whether arising before or after the Commencement Date, pledged to Chase pursuant to: (a) the Security Agreement, dated as of August 26, 2008, by the Debtor in favor of Chase and any of its successors and assigns party to the Clearance Agreements; and (b) the Security Agreement, dated as of September 9, 2008, by the Debtor in favor of Chase and any of its affiliates, subsidiaries, successors, and assigns. The Agreements contain these additional key provisions: -- the Clearance Agreement was amended Aug. 26, 2008 pursuant to which Lehman Brothers Holdings, Inc., Lehman Brothers International (Europe), Lehman Brothers OTC Derivatives Inc. and Lehman Brothers Japan Inc., joined Lehman Brothers Inc. and Lehman Commercial Paper Inc. as customers under the Agreement. The amendment also said that except for the obligations of Lehman Brothers Holdings under the Guaranty and Security Agreement dated Aug. 26, 2008, the obligations and liabilities of each of the Lehman entities will be several and not joint. -- on Sept. 10, 2008, Lehman Brothers Bank, FSB, Lehman Brothers Bankhaus Aktiengesellschaft, and Lehman Brothers Commercial Bank signed separate clearance agreements with Chase. -- Pursuant to the Clearance Agreement, Chase will make advances or loans to LBI and other Lehman Entities, which loans will be backed by security interest in, among other things, liens upon and right of set-off as to balance of every existing or future deposit that it maintains with Chase. -- Ian Lowitt, as CFO of Lehman Brothers Holdings, signed a Guaranty dated Aug. 26, 2008, pursuant to which the comapny agreed to guarantee the loans and advances made by Chase to LBI, et al. -- Chase agreed to act as non-exclusive agent for securities transactions for the Lehman entities. Chase also agreed to provide tri-party custodian services, pursuant to which it will accept from LBI any securities, which include physical securities and securities held by the Federal Reserve Bank of New York, DTC, PTC, First Chicago Clearing Center, or other depository or clearing corporation. Full-text copies of the Agreements can be accessed for free at http://bankrupt.com/misc/LehmanChaseAgreements.pdf $138 Billion in Advances By Chase on Sept. 15 and 16 At the opening of the U.S. securities markets on Sept. 15, 2008, after the filing of Lehman's Chapter 11 petition, Chase advanced $87 billion to or for the benefit of the Lehman Clearance Parties at the request of the Debtor and the Federal Reserve Bank of New York, Mr. Miller relates. That Commencement Date Advance was necessary to clear, and facilitate the settlement of, securities transactions with customers or clients of the Lehman Clearance Parties to avoid a disruption of the financial markets, he says. The Commencement Date Advance was repaid by the Federal Reserve Bank. Mr. Miller relates further that on Sept. 16, Chase advanced "a comparable amount" to or for the benefit of the Lehman Clearance Parties at the request of the Debtor and the Federal Reserve Bank of New York. He says the Second Day Advance was necessary to clear, and facilitate the settlement of, securities transactions with customers or clients of the Lehman Clearance Parties to avoid a disruption of the financial markets. Chase may elect to make additional advances under the Clearance Agreements in its sole discretion. Pursuant to the Guarantee Agreements and Security Agreements, all Postpetition Advances are guaranteed by the Debtor, which guarantees are secured by the Holding Company Collateral, Mr. Miller adds. Bankruptcy Court Confirms Advances Pursuant to Section 105(a) of the Bankruptcy Code, the Debtor sought and obtained confirmation from Judge James M. Peck that any of Chase's claims arising under or pursuant to the Clearance Agreements, Guarantee Agreements, or Securities Agreements -- which agreements are securities contracts within the meaning of Section 741(7)(A) of the Bankruptcy Code -- arising from any Postpetition Advances, will be allowed as claims under the Guarantee Agreements and will be secured by the Holding Company Collateral to the same extent as if they had been made prior to the Petition Date. Mr. Miller asserted that to assure that Chase will continue to perform under the Clearance Agreements, out of an abundance of caution. it is necessary for the Court to confirm that the claims of Chase that may arise from Postpetition Advances or other transactions arising under or pursuant to the Clearance Agreements, Guarantee Agreements, or Security Agreements post the Petition Date will be allowed as claims under the Guarantee Agreements secured by the Holding Company Collateral. To the extent the Court views the Postpetition Advances as the postpetition incurrence of debt, the Debtor asked the Court to confirm that the Postpetition Advances are authorized under Section 364 of the Bankruptcy Code as to the Guarantee Agreements and the Holding Company Collateral. The Debtor clarified that it is not asking the Court to validate Chase's guarantees or the liens securing the guarantees, or to grant administrative expense status for the Clearing Claims. Rather, out of an abundance of caution, it was asking the Court to confirm that Chase's Clearing Claims will be allowed as claims under the Guarantee Agreements that are secured by the Holding Company Collateral to the same extent as if they had been made prior to the Commencement Date. The Debtor has been advised by Chase that, if the Court will not grant the request, Chase will be unable to continue to make Postpetition Advances at the Debtor's request, Mr. Miller relates. It is essential to the Debtor's customers that Chase continue to clear securities transactions for the Lehman Clearance Parties in accordance with its prepetition practices. Any cloud on the guarantees vis-a-vis the Holding Company Collateral will inhibit Chase from clearing advances to or for the benefit of the Lehman Clearance Parties to the detriment of public investors. According to Mr. Miller, approval of the Debtor's proposal is fully consistent with the terms of the Bankruptcy Code, will facilitate a smooth and orderly transition of the Debtor's operations into Chapter 11, and minimize not only the disruption of the Debtor's business affairs, but also the disruption of the financial markets as a whole. After a hearing on September 16, the Court ruled that any of Chase's claims against Lehman arising under or pursuant to the Clearance Agreements, the Guarantee Agreements, or the Securities Agreements arising from any Postpetition Advances will be allowed as claims under the Guarantee Agreements and will be secured by the Holding Company Collateral to the same extent as if they had been made prior to the date on which the Debtor commenced its Chapter 11 case in the Court. Chase: Advances for Clearing of Securities Transactions with LBI clients JPMorgan Chase Bank, N.A., delivered a statement to Judge Peck supporting the Debtor's motion for confirmation of the status of the Clearing Advances. Harold S. Novikoff, Esq., at Wachtell, Lipton, Rosen & Katz, in New York, confirmed that Chase advanced $87 billion to or for the benefit of LBI on September 15, 2008, in order to clear, and facilitate the settlement of, certain securities transactions with customers or clients of LBI. The advance was repaid on Sept. 15, 2008. Mr. Novikoff adds that on Sept. 16, 2008, Chase advanced $51 billion. Mr. Novikoff stressed that the Debtor is not asking for a validation of Chase's guarantee from the Debtor or of the liens that secure that guarantee, nor does it seek a determination that Chase is entitled to administrative expense status. Rather, the Court is being asked to confirm that Clearing Claims arising from Postpetition Advances or other transactions after the filing of the Debtor's bankruptcy petition will be allowed as claims under the Guarantee Agreements, and will be secured by the Holding Company Collateral, to the same extent as if they had been made prior to the filing of the Debtor's bankruptcy petition. Mr. Novikoff warned that if the Court does not grant the Debtor's proposal, Chase would stop making Postpetition Advances as it has been doing at the Debtor's request. * * * According to Bloomberg News, Chase said that the second advance of $51 billion has been repaid and the process will zero out the advances at the end of each day. The advances are guaranteed through collateral of Lehman Brothers' holding company under an existing agreement. Chase holds about $17 billion in collateral to secure the advances, according to Bloomberg. ----------------------------------------------------------------- [00029] LB 745 LLC JOINS LEHMAN HOLDINGS IN CHAPTER 11 ----------------------------------------------------------------- LB 745 LLC submitted a Chapter 11 petition on Sept. 16, joining its parent, Lehman Brothers Holdings, Inc., which sought bankruptcy protection a day earlier. LB 745, a real estate business, has been assigned Case No. 08-13600, and will be jointly administered with Lehman Brothers Holdings' case. LB 745 says it has one unsecured creditor: Rock-Forty-Ninth LLC c/o The Rockefeller Group 1221 Avenue of the Americas New York, New York 10020 and estimates Rock-Forty-Ninth holds a $0 claim. LB 745 says it has been current with its lease obligations to Rock-Forty-Ninth. The document, however, noted, "At this time the Debtor is not able to determine its other creditors." LB 745 said in its bankruptcy petition that its assets and debts are consolidated with affiliates. The Debtors' bankruptcy cases are handled by Judge James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York. ----------------------------------------------------------------- [00030] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CH. 11 CASES ----------------------------------------------------------------- Lehman Brothers Holdings Inc., and its affiliate LB 745 LLC, asked the U.S. Bankruptcy Court for the Southern District of New York to jointly administer their Chapter 11 cases under Case No. 08-13555 assigned to Lehman Brothers. Under Rule 1015(b) of the Federal Rules of Bankruptcy Procedure, the court may order a joint administration of the estates if two or more petitions are pending in the same court by or against a debtor and an affiliate. Shai Waisman, Esq., at Weil, Gotshal & Manges LLP, in New York, said that by jointly administering the cases, the Debtors would be able to save resources, and would be kept from filing duplicative court documents. Mr. Waisman further said it would not affect the creditors' rights since the Debtors are merely requesting that their estates "be administratively consolidated not substantively consolidated." The Debtors request that the caption of their cases be modified to reflect the joint administration of their cases as: UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------x : In re : Chapter 11 Case No. : LEHMAN BROTHERS HOLDINGS INC., et al., : 08-13555 (JMP) : Debtors. : (Jointly Administered) : : ---------------------------------------x The Debtors also sought the Court's approval to file consolidated monthly operating reports. In addition, Lehman sought the Court's ruling directing that certain orders issued in its case be made applicable to LB 745. These include the orders approving the (i) proposed enforcement of the automatic stay; (ii) the employment of Epiq Bankruptcy Solutions, LLC; (iii) the extension of deadline for providing information required under Local Bankruptcy Rule 1007-2(a) and (b); (iv) extension of deadline to file schedules and statements of financial affairs; and an order waiving the requirement to file a list of creditors. The Debtors said that the request, if approved, would help them save time and expense for their estates as well as reduce the burden on the Court and other concerned parties. "Entry of an order directing that certain orders in Lehman Brothers' Chapter 11 case be made applicable to LB 745 in its Chapter 11 case would obviate the need for duplicative notices, motions, applications, and orders to be filed in the case," the Debtors said in a court filing. ----------------------------------------------------------------- [00031] DEBTOR'S APPLICATION TO EMPLOY EPIQ AS NOTICE AGENT ----------------------------------------------------------------- Lehman Brothers Holdings Inc., obtained the Court's approval to employ Epiq Bankruptcy Solutions LLC, as its claims and noticing agent. Lehman Brothers sought the employment of Epiq given the large number of its creditors. "[Lehman Brothers] estimates that it has hundreds of thousands of creditors. Noticing, receiving, docketing and maintaining proofs of claims from such a large number of creditors may be unduly time consuming and burdensome for the Clerk of the Court," the company said in a prior court filing. Lehman Brothers selected the firm because of its extensive experience in noticing and claims administration in Chapter 11 cases. As claims and notice agent, Epiq will: (1) notify all creditors of Lehman Brothers' bankruptcy filing and the first meeting of creditors pursuant to Section 341 of the Bankruptcy Code; (2) maintain an official copy of the company's schedules of assets and liabilities, and statements of financial affairs, list all known creditors and their claims; (3) design, maintain and operate in conjunction with the Lehman Brothers' website, as a centralized location where the company will provide information about the case; (4) maintain a copy service from which concerned parties may obtain copies of documents; (5) notify creditors of the existence and amount of their claims as provided in the schedules; (6) furnish a form for the filing of proofs of claim after being approved by the Court; (7) file with the Clerk within 10 days of service, a copy of the proof of claim notice, a list of persons to whom it it is mailed, and the date the notice is mailed; (8) docket all claims received, maintain the official claims register for the Lehman Brothers on behalf of the Clerk, and provide the Clerk with immediate web access to the claims register upon request; (9) specify in the claims register the (i) the claim number assigned, (ii) the date received, (iii) the name and address of the claimant and agent, and (iv) the classification of the claim; (10) record transfers of claims and provide notice of the transfers; (11) make changes in the claims register pursuant to court order; (12) turn over to the Clerk copies of the claims register upon completion of the docketing process for all claims received to date by the Clerk's office; (13) maintain the official mailing list for the company of all entities that have filed a proof of claim; (14) submit an order dismissing Epiq and terminating its services 30 days prior to the closing the bankruptcy case; and (15) transport all original documents in proper format, as specified by the Clerk's Office, to the Federal Records following the conclusion of the bankruptcy case. In exchange for the services, Lehman Brothers will pay the employees of Epiq at these hourly rates: Employees Rates --------- ----------- Clerk $34 - $51 Case Manager (Level 1) $80 - $140 IT Programming Consultant $100 - $161 Case Manager (Level 2) $125 - $150 Senior Case Manager $175 - $233 Senior Consultant to be determined Lehman Brothers will also pay Epiq for the equipment and other materials used as well as out-of-pocket expenses incurred in connection with its employment. The firm will receive a $25,000 retainer. In his affidavit, Daniel McElhinney, senior vice-president and director of operations of Epiq, disclosed that his firm does not represent interest adverse to Lehman Brothers. He assured the Court that the firm is a "disinterested person as defined in Section 101(14) of the Bankruptcy Code. ----------------------------------------------------------------- [00032] DEBTOR'S MOTION TO ENFORCE AUTOMATIC STAY ON CREDITORS ----------------------------------------------------------------- See prior entry at [00007]. Lehman Brothers Holdings Inc. obtained the Court's ruling enforcing the so-called "automatic stay" in its Chapter 11 case. In its order dated Sept. 16, the Court prohibited creditors and other concerned parties, including foreign and domestic governmental units to: (1) commence or continue any judicial, administrative or other action against Lehman Brothers including the issuance or employment of process that was or could have been done before the company's bankruptcy filing; (2) enforce against the company or against property of the estate a judgment obtained before the bankruptcy filing; (3) collect, assess or recover a claim against the company that arose before the bankruptcy filing. (4) take any action to obtain possession of property of the estate or to exercise control over property of the estate; (5) take any action to create, perfect, or enforce any lien against property of the estate; (6) take any action to create, perfect or enforce any lien against property of the company to the extent that such lien secures a claim that arose the bankruptcy filing; and (7) offset any debt owing to Lehman Brothers that arose before the bankruptcy filing against any claim against the company. The Court's decision does not affect the rights of the creditors and other concerned parties to seek relief from the automatic stay. ----------------------------------------------------------------- [00033] DEBTOR'S MOTION TO EXTEND DEADLINE TO FILE SCHEDULES ----------------------------------------------------------------- See prior entry at [00011]. The Court gave Lehman Brothers Holdings Inc., until Nov. 14 to file their statements of financial affairs and schedules. The Court did not require the company to file a list of its equity security holders and to provide those holders with a notice of its bankruptcy filing. ----------------------------------------------------------------- [00034] BARCLAYS INKS $1.75B DEAL TO BUY KEY LEHMAN'S U.S. UNITS ----------------------------------------------------------------- The Board of Barclays announces that Barclays has agreed, subject to US Court and relevant regulatory approvals, to acquire Lehman Brothers North American investment banking and capital markets operations and supporting infrastructure. The transaction will create a premier integrated global bulge bracket investment banking company with a leading presence in all major markets and across all major lines of business including: equity capital markets, debt capital markets, mergers and acquisitions, commodities trading and foreign exchange. Barclays will acquire trading assets with a current estimated value of œ40bn (US$72bn) and trading liabilities with a current estimated value of œ38bn (US$68bn) for a cash consideration of œ0.14bn (US$0.25bn). Barclays will also acquire the New York headquarters of Lehman Brothers as well as its two data centres at close to their current market value. In response to this opportunity, certain Barclays shareholders have expressed support for the transaction and interest in increasing their shareholdings in Barclays. The Board of Barclays expects these discussions to lead to a subscription of at least œ0.6bn (US$1bn) of additional equity. The proposed transaction with Lehman Brothers and the additional equity would result in an enhancement of Barclays earnings and capital ratios. Commenting on this announcement, John Varley, Barclays Group Chief Executive, said: "The proposed acquisition of Lehman Brothers North American investment banking and capital market operations accelerates the execution of our strategy of diversification by geography and business in pursuit of profitable growth on behalf of our shareholders, in particular increasing the percentage of Barclays earnings sourced in North America. This transaction delivers the strategic benefits of a combination with Lehman Brothers core franchise, whilst meeting Barclays strict financial criteria, and strengthening our capital ratios." Robert E Diamond Jr, Barclays President, said: "This is a once in a lifetime opportunity for Barclays. We will now have the best team and most productive culture across the world's major financial markets, backed by the resources of an integrated universal bank. We welcome the opportunity to add Lehman's people and capabilities to the Barclays team." Herbert H McDade III, Lehman Brothers Chief Operating Officer, said: "Lehman Brothers strength has always been our client franchise. With this transaction, we have the opportunity to continue the growth and development of our US investment banking and capital market franchises with one of the leading financial institutions in the world. Together with Barclays, these businesses will be a part of a global financial services powerhouse delivering a comprehensive suite of products and services to our clients." 1. Transaction Structure The Lehman Brothers operations to be acquired in the transaction (the 'Acquisition') have approximately 10,000 employees, trading assets currently estimated to have a value of œ40bn (US$72bn), and liabilities currently estimated to have a value of œ38bn (US$68bn). The Lehman Brothers operations include Lehman Brothers North American fixed income and equities sales, trading and research and investment banking businesses (the 'Lehman Brothers businesses'). Lehman Brothers will receive œ0.14bn (US$0.25bn) in cash as consideration for the Lehman Brothers businesses. Barclays has also agreed to acquire Lehman Brothers New York Head Office at 745 Seventh Avenue and two data centres in New Jersey for close to their current market value, estimated at œ0.8bn (US$1.5bn). The combined consideration totals some œ1.0bn (US$1.75bn). The Acquisition is subject to a number of conditions including the approval of the United States Bankruptcy Court for the Southern District of New York. Lehman Brothers is filing an emergency motion with the Bankruptcy Court to seek a hearing to obtain approval for the Acquisition. The Acquisition is also subject to certain usual conditions including receipt of necessary regulatory approvals and US antitrust clearances. The agreement for the Acquisition may be terminated if it is not completed by 24 September 2008. 2. Transaction Benefits The Acquisition will combine two strong client franchises and product offerings, with the potential to create significant value for Barclays shareholders. The Lehman Brothers businesses are a highly complementary fit for Barclays investment banking business, Barclays Capital. The combined business will be a premier global investment bank with an increased presence in the US and an enhanced product offering. Among other benefits, the combination of the two businesses will: -- confirm Barclays Capital as a leading debt capital markets house globally; -- have a top 3 position in the US capital markets, the largest in the world; -- extend Barclays Capital's range of investment banking products, with the addition of Lehman Brothers strong US M&A and equity capital markets franchises; and -- strengthen Barclays Capital's hedge fund franchise through the addition of prime brokerage and cash equity capabilities. The Acquisition will result in the proportion of Barclays revenues derived from the US rising significantly. Given the strong cultural fit, Barclays intends to achieve a rapid integration so as to minimise disruption to employees, clients and counterparties. 3. Barclays Current Trading Barclays has traded satisfactorily in July and August. The monthly run rate for the Group's profit before tax in these months was slightly lower than the average for the first half of the year, reflecting usual seasonality. All businesses were profitable. 4. Employees and Management Barclays believes the Lehman Brothers businesses have an excellent team of people whose skills, capabilities and culture provide a good fit with Barclays and its clients. Barclays looks forward to welcoming them to our team and working together to deliver the combination's full potential. The acquired businesses will be merged into Barclays Capital, which forms part of Barclays Investment Banking and Investment Management of which Robert E Diamond Jr, is Chief Executive. 5. Share Issue Further details of the expected issue of new shares in connection with the Acquisition will be published in due course. 6. Advisers Barclays Capital, Credit Suisse Securities (Europe) Limited, Deutsche Bank AG, London Branch and JPMorgan Cazenove Limited are acting as financial advisers to Barclays. Credit Suisse Securities (Europe) Limited and JPMorgan Cazenove Limited are joint corporate brokers to Barclays. Clifford Chance LLP and Cleary Gottlieb Steen & Hamilton LLP are acting as legal advisers to Barclays. Barclays Capital, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for Barclays PLC and Barclays Bank PLC and for no one else as joint financial adviser in connection with the Acquisition and will not be responsible to any other person for providing the protections afforded to clients of Barclays Capital nor for advice in connection with the Acquisition or the contents of this announcement or any other matters referred to in this announcement. Credit Suisse Securities (Europe) Limited ("Credit Suisse"), which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as joint financial adviser and joint corporate broker to Barclays Bank PLC and Barclays PLC and is acting for no-one else in connection with the Acquisition, and will not be responsible to anyone other than Barclays Bank PLC and Barclays PLC for providing the protections afforded to customers of Credit Suisse nor for providing advice to any other person in relation to the Acquisition or any other matter referred to herein. Deutsche Bank AG, London branch, is authorised under German Banking Law (competent authority: BaFin - Federal Financial Supervising Authority) and regulated by the Financial Services Authority for the conduct of UK business. Deutsche Bank AG, London branch, is acting as joint financial advisor for Barclays Bank PLC and Barclays PLC and no one else in connection with the Acquisition and will not be responsible to anyone other than Barclays Bank PLC and Barclays PLC for providing the protections afforded to the clients of Deutsche Bank AG, London branch, or for providing advice in connection with the Acquisition or any other matter referred to herein. JPMorgan Cazenove Limited ("JPMC"), which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as joint financial advisor and joint corporate broker to Barclays Bank PLC and Barclays PLC and no-one else in connection with the Acquisition, and will not be responsible to anyone other than Barclays Bank PLC and Barclays PLC for providing the protections afforded to customers of JPMC nor for providing advice to any other person in relation to the Acquisition or any other matter herein. Information on Barclays Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services with an extensive international presence in Europe, the United States, Africa and Asia. With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs approximately 147,000 people. Barclays moves, lends, invests and protects money for over 42 million customers and clients worldwide. For further information about Barclays, please visit our Web site http://www.barclays.com/ Other information The exchange rate used in this announcement is US$1.7935:œ1.00 as published in the Financial Times on 16 September 2008. Nothing in this announcement is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per Barclays share for the current or future financial years, or those of the enlarged group, will necessarily match or exceed the historical published earnings per Barclays share. This announcement shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale or purchase of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. * * * "While this could be a positive development for the long run, given the current market conditions, we are skeptical that the market is going to reward any deal," Derek Chambers, a London- based analyst at Standard & Poor's Equity Research Ltd., said in a note to investors, according to Bloomberg News. Barclays was involved in talks to buy Lehman over the weekend to save it from collapse. Barclays, however, pulled out because it couldn't obtain guarantees from the government or other Wall Street firms to protect against potential losses on Lehman's assets. Lehman's bankruptcy filing and the near collapse of giant investment bank Merrill Lynch and insurance giant AIG have caused worldwide financial turmoil. The U.S. Federal Reserve's decision to lend up to $85 billion to AIG, in exchange for its 80% stake, however, has brought some reprieve. Bank of America, which was also involved in talks to buy Lehman, has agreed to buy Merrill Lynch for $50 billion, averting another collapse by an investment bank. Stocks rebounded after talks on Tuesday about Barclays being back in the negotiating table to buy assets of Lehman resurfaced, according to WAPT.com. The Dow Jones industrial average rose 141 points and finished at 11,059 on Tuesday. A day before, Dow Jones dropped 504 points. The S&P 500 gained nearly 21 points to 1,213. The Nasdaq composite added 28 points to 2,207. Declining stocks held a 9-to-7 lead. ----------------------------------------------------------------- [00035] DEBTOR'S MOTION TO WAIVE ASSET & DEBT INFO. IN PETITION ----------------------------------------------------------------- See prior entry at [00012]. The Court gave Lehman Brothers Holdings Inc. until Oct. 31 to provide the information required under Rule 1007-2(a) and (b) of Local Bankruptcy Rules for the Southern District of New York. Local Rule 1007-2(a) and (b) requires a debtor to file an affidavit containing a summary of its assets and liabilities, a list of its properties not in its possession, the number and classes of its shares of stock, debentures or other securities that are publicly held, among other things. ----------------------------------------------------------------- [00036] DEBTOR'S MOTION TO WAIVE LIST OF CREDITORS IN PETITION ----------------------------------------------------------------- See prior entry at [00013]. Lehman Brothers Holdings Inc. obtained a court ruling permitting the company not to file a list of its creditors contemporaneously with its Chapter 11 petition. Lehman Brothers was given until October 15 to furnish the list to its notice and claims agent. The company was directed to mail the notice of its bankruptcy filing to creditors not later than the date that is 20 days before the meeting of creditors pursuant to Section 341 of the Bankruptcy Code is held. ----------------------------------------------------------------- [00037] LEHMAN MULLS SALE OF INVESTMENT MGT. UNIT TO BAIN/HELLMAN ----------------------------------------------------------------- According to Bloomberg News, Lehman Brothers Holdings is in discussions regarding a sale of its investment-management unit to private-equity firms Bain Capital LLC and Hellman & Friedman LLC, Bloomberg News reports, citing people familiar with the negotiations. Lehman's Investment-Management unit recorded net revenues (revenues less interest) of $634 million in the quarter ended Aug. 31, 2008, compared to $802 million during the same period in 2007. Investment Management provides strategic investment advice and services to institutional and high-net-worth clients on a global basis. During 2007, Lehman acquired H.A. Schupf, a high net worth boutique asset manager with approximately $2.3 billion in assets under management; LightPoint Capital Management LLC, a leveraged loan investment manager based in Chicago, Illinois, with approximately $3.2 billion in assets under management; Dartmouth Capital, a U.K.-based investment advisory firm with approximately $340 million in assets under advisory; and MNG Securities, an equity securities brokerage firm in Turkey. Lehman also purchased interests in both Spinnaker Asset Management Limited and Spinnaker Financial Services, part of Spinnaker Capital, an emerging markets investment management firm, and a 20% interest in the D.E. Shaw group, a global investment management firm. The Asset Management section under Investment-Management includes proprietary asset management products across traditional and alternative asset classes, through a variety of distribution channels, to individuals and institutions: (i) Neuberger Berman, which Lehman acquired in 2003; (ii) Lehman Brothers Asset Management brands; and (iii) Private Equity, under which a number of private equity portfolios are managed. A second section, Private Investment Management, provides traditional brokerage services and comprehensive investment, wealth advisory, trust and capital markets execution services to both high-net- worth individuals and small and medium size institutional clients, leveraging all the resources of Lehman Brothers. Established in 1984, Bain Capital is an private investment firm, managing over $78 billion in assets. Its affiliated advisors in private equity, public equity, leveraged debt assets, venture capital and global macro assets. Hellman & Friedman LLC, founded in 1984, is a private equity investment firm well respected for its distinctive investment philosophy and approach. During its 22-year investing history, it has raised and managed over $16 billion of committed capital and has invested in over 50 companies. ----------------------------------------------------------------- [00038] SIPC DOES NOT EXPECT LEHMAN BROTHERS INC. LIQUIDATION ----------------------------------------------------------------- WASHINGTON, D.C. -- September 15, 2008 -- The Securities Investor Protection Corporation (SIPC), which maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms, issued the following statement this morning in relation to reports about the bankruptcy filing of Lehman Brothers Holdings, Inc. SIPC President Stephen Harbeck said: "SIPC has not initiated a liquidation proceeding against the broker-dealer Lehman Brothers Inc. and we do not currently anticipate doing so. As of this morning, it appears that all customer cash, stocks and other securities are accounted for. It is important to understand that the holdings of broker- dealer Lehman Brothers Inc., would not be directly impacted by a bankruptcy filing at the separate entity Lehman Brothers Holdings, Inc. Should the situation at Lehman Brothers Inc. change in some material way not now anticipated by SIPC and regulators, we will, of course, intervene as necessary to protect the cash and securities of customers. However, I want to underscore that such an action is considered unlikely at this time. SIPC is working closely with the U.S. Securities and Exchange Commission (SEC) to monitor the situation at Lehman Brothers Inc. The Securities Investor Protection Corporation remains vigilant and committed to our core mission: When a brokerage firm is closed due to bankruptcy or other financial difficulties and customer assets are missing, SIPC steps in as quickly as possible and, within certain limits, works to return customers' cash, stock and other securities. Without SIPC, investors at financially troubled brokerage firms might lose their securities or money forever or wait for years while their assets are tied up in court." About SIPC The Securities Investor Protection Corporation is the U.S. investor's first line of defense in the event a brokerage firm fails, owing customer cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds. The statute that created SIPC provides that customers of a failed brokerage firm receive all non- negotiable securities - such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash. From the time Congress created it in 1970 through December 2006, SIPC has advanced $505 million in order to make possible the recovery of $15.7 billion in assets for an estimated 626,000 investors. For more information about SIPC, see "The Investor's Guide to Brokerage Firm Liquidations" at: http://www.sipc.org/pdf/SIPC_brochure_Investors_Guide_To_BD_Liquidations.pdf ----------------------------------------------------------------- [00039] LINKLATERS TO ADVISE PWC IN LEHMAN U.K. ADMINISTRATION ----------------------------------------------------------------- See prior entry at [00006] (Lehman Brothers International (Europe) in Administration). The U.K. Administrators tapped the services of Linklaters LLP to advise them in the U.K. administration proceeding for Lehman Brothers International Europe according to a report by TheLawyer.com. PricewaterhouseCoopers partners Mike Jervis, Tony Lomas, Steven Pearson and Dan Schwarzmann sought Linklaters' services after Lehman Brothers International was placed into administration and they were appointed as joint administrators to wind down the business. Tony Bugg, Linklaters' head of restructuring and insolvency, leads the engagement, and will be assisted by Richard Holden, restructuring partner, and Matthew Middleditch and David Ereira, corporate partners, according to the report. Lehman Brothers International is the principal U.K. trading company in the Lehman group. Three other group companies: -- Lehman Brothers Holdings Plc, -- Lehman Brothers Limited and -- LB UK RE Holdings Limited have also been placed into administration. In a Sept. 15 press release, Lehman Brothers Holdings Inc. said the U.K.-based firms were put into administration in light of the absence of ongoing financial support from the company. The London Stock Exchange recently declared Lehman Brothers International a defaulter, meaning it would lose its membership and ability to trade in the stock exchange. ----------------------------------------------------------------- [00040] LEHMAN BROTHERS' JAPAN UNITS FILE FOR BANKRUPTCY ----------------------------------------------------------------- See prior entry at [00017], and prior related entry at [00018] (Japan Fin'l Svcs Agency Halts Lehman Unit's Operations). Lehman's Statement TOKYO, Japan -- September 16, 2008 -- The director of Lehman Brothers Holdings Japan Inc and the board of directors of Lehman Brothers Japan Inc ("LBJ") have resolved for the companies to apply to the Tokyo District Court on Tuesday, 16 September 2008 to commence civil rehabilitation procedures under the Japan Civil Rehabilitation Law. The Tokyo District Court ordered the protection on the companies as of 16 September 2008, pursuant to which the companies are prohibited from payment of obligations based on the causes arose on or before 15 September 2008, excluding certain exceptions. The application is made in connection with the filing of a petition with the United States Bankruptcy Court for the Southern District of New York under Chapter 11 of the U.S. Bankruptcy Code by Lehman Brothers Holdings Inc. The Financial Services Agency of the Japanese Government has also issued a business suspension order in relation to LBJ on 15 September 2008. Under the business suspension order, LBJ shall suspend all "financial instrument business" (except for transactions relating to the performance and closing of existing agreements entered into on or before 12 September 2008 and the return of assets deposited by LBJ's customers) between 15 September 2008 and 26 September 2008. To ensure a fair treatment of all creditors and that the rehabilitation procedures are carried out in an orderly manner, the companies are working with the relevant Japanese regulatory authorities and are in the process of ascertaining its financial position. The companies will suspend settlement of existing contracts before its true financial position can be ascertained. ----------------------------------------------------------------- [00041] JAPAN BANKS & INSURERS HAVE US$2.3BIL. EXPOSURE TO LEHMAN ----------------------------------------------------------------- See prior related entry at [00019] (Japan Infuses US$24-BIL. in Market; Banks Owed $1-Bill.). Japan's banks and insurers disclosed a combined JPY245 billion (US$2.3 billion) of potential losses tied to the collapse of Lehman Brothers Holdings Inc., Bloomberg news reports. According to Bloomberg, Banks from Tokyo-based Mitsubishi UFJ, Japan's largest, to Bank of the Ryukyus Ltd., a lender based in Okinawa, disclosed assets that might become worthless following Lehman's filing for bankruptcy protection. The total for 37 banks was JPY198 billion, compared with a combined JPY47 billion at seven Japanese insurers, according to data compiled by Bloomberg based on announcements. Mitsubishi UFJ said in a statement that, on a net basis, the total amount of credits, etc., extended by group companies of Mitsubishi UFJ Financial Group, Inc., to Lehman Brothers Holdings and related companies is US$235 million: 1. The Bank of Tokyo-Mitsubishi UFJ, Ltd. (total US$260 million) Credits, including loans, etc.: US$218 million Of which, to the headquarters: US$35 million to Japanese subsidiary: JPY20 billion Corporate bonds: US$42 million Of these amounts US$40 million is hedged by credit default swaps. 2. Mitsubishi UFJ Trust & Banking Corporation (total US$15 million) Mizuho Financial Group Inc., Japan's second-largest bank by revenue, may record losses as much as JPY20 billion due to exposure to Lehman, spokeswoman Masako Shiono said in an interview, according to Bloomberg. The absolute priority rule under the Bankruptcy Code provides that creditors have priority over a company's equity holders. Shareholders will only receive value after creditors have been paid. Unsecured creditors won't obtain any recovery until secured creditors receive recovery to the extent of the value of their collateral. ----------------------------------------------------------------- [00042] SINGAPORE EXCHANGE BANS LEHMAN FROM TAKING NEW SECURITIES ----------------------------------------------------------------- The Singapore Stock Exchange has suspended Lehman Brothers Pte Ltd from taking on new securities and derivatives positions. SGX is facilitating the orderly transfer of customers' derivatives positions from LBPL to other brokers. At present, LBPL is meeting their financial obligations to SGX's securities and derivatives clearing houses. SGX will continue to monitor the situation and maintain the orderly function of the markets. ----------------------------------------------------------------- [00043] KOREA HALTS LEHMAN OPERATIONS; BANKS HAVE $720M EXPOSURE ----------------------------------------------------------------- Korea's financial regulator, the Financial Services Commission, banned Lehman Brothers Holdings Inc.'s Korean units from selling and repaying debts until Dec. 15., the day after parent firm filed for bankruptcy in the U.S., Yonhap News reports. According to the report, Lehman's Seoul units will also be prohibited from receiving deposits, trading stocks and transferring money overseas. The commission, the report relates, said the ban was aimed at "protecting investors at home and preventing potential chaos in local financial markets." The Korean Times notes that Seoul's benchmark stock index plunged 6.54% on the news of Lehman's bankruptcy and insurance giant AIG Inc.'s struggle for survival after being battered by mortgage losses. Moreover, Asia Pulse relates, that the Korean won currency also plunged by KRW50.9 to close at 1,160.0 versus the U.S. dollar, marking the biggest one-day loss since August 1998, as local banks scrambled to buy the U.S. currency. "The situation in the U.S. financial markets appears to be bad because Lehman filed for bankruptcy only three days after it announced a plan to sell its assets," Asia Pulse cited Shim Jae-yeop, a senior analyst at Meritz Securities Co. in Seoul, as saying. Government officials, Yonhap points out, tried to calm the market by assuring the public that Lehman's demise would probably erase uncertainties in global financial markets in the long term. The Pulse says that the Korea's finance ministry and the Bank of Korea said they would act "if necessary." Vice Finance Minister Kim Dong-soo said the government will provide liquidity to stabilize the nation's financial markets. "The government and the Bank of Korea will take steps against excessive fluctuations in foreign exchange markets," he said. As of the end of July, the Lehman units in Seoul had a total of KRW1.6 trillion (US$1.44 billion) in assets from investors. South Korean financial companies held about US$720 million in securities linked to Lehman. ----------------------------------------------------------------- [00044] TAIWAN SUSPENDS LEHMAN; INVESTORS MAY SEEK DAMAGES ----------------------------------------------------------------- The Financial Supervisory Commission, Taiwan's watchdog, said it would help investor's of Lehman Brothers Holdings Inc.'s Taiwan unit to file for damages against its parent firm if the need arises, Business News reports. The Commission, the report relates, also ordered the Lehman's Taiwan office to suspend operations until the parent company's financial crisis is over. The local benchmark TAIEX stock index, The China Post relates, precipitated in a steep and combined loss of 554 points in the first two days of trading this week, compared with the sharp fall of 504 points in the Dow Jones industrial average index on Monday. Taiwan Stock Exchange executives conducted an audit check at the office of Lehman Brothers in accordance with the enforcement regulations concerning TSE business operations, but have found no abnormalities except it voluntarily ceased in securities trading on September 16, according to The Post. The Post says that a large number of financial institutions in Taiwan have made investments in the bonds and other securities issued, guaranteed by, or related to the Lehman. Among the local financial institutions, Hua Nan Commercial Bank revealed that it still holds about NT$440 million worth of such bonds, The Post says. Hua Nan executives said they have taken necessary actions to secure the NT$1.7 billion loan extended to the local branch of Lehman Brothers, the same report adds. Taiwan's institutional and retail investors have about NT$80 billion (US$2.5 billion US dollars) of exposure in Lehman investments. The Taiwan branch of Lehman Brothers has also made investment in the transactions of non-performing loans and delinquent assets on the Taiwan market. Business News points out that some Taiwan investors have asked the Commission to freeze the assets of Lehman's Taiwan office to cover their potential losses, but the Commission said that if there are losses, the parent company is responsible, not its unit in Taiwan. If there is a need, it would help Taiwan investors seek damages from the parent company, the commission added. ----------------------------------------------------------------- [00045] INDIA STAYS LEHMAN OPERATIONS; FIRMS LOSE $431 MILLION ----------------------------------------------------------------- The Reserve Bank of India (RBI) has advised Indian unit, Lehman Brothers Capital Pvt Ltd, that it would need prior approval of RBI before contracting any direct/indirect liability from any institution in India or outside India or making any foreign currency remittance, India Infoline News Service reports. According to Infoline News, the RBI is keeping a close watch on the developments in the wake of Lehman's bankruptcy filing and is in constant touch with banks and other market participants to manage any fallout of these developments on the Indian markets in an orderly manner. Meanwhile, The Economic Times says Lehman's bankruptcy wiped off more than Rs 2,000 crore (US$431 million) from the market valuation of those Indian companies in which the U.S. firm has made equity investments. In addition, recent news reports cited by The Financial Express says Lehman had asked a section of its BPO staff in India to quit. In India, Lehman employs a total of 2,500 including those in the BPO unit. The Times relates that Lehman has recorded a loss of more than Rs 50 crore on its investments in India, which is nearly 10 per cent of its current holding worth an estimated over Rs 500 crore. Late last month, Lehman offloaded around Rs 400 crore of its equity holding in nearly 10 companies, most of which were purchased by Deutsche Bank. Prior to the sell-off, Lehman's Indian equity portfolio is estimated to have been worth more than Rs 1,000 crore, which has now nearly halved to about Rs 500 crore, the Times says. Lehman also had equity holding in about two dozen firms at the end of June quarter including Spice Communications, Spice Mobile, Anant Raj Industries, Edelweiss Cap, IVRCL Infra and Tulip Telecom, the Times adds. Separately, the Times reports that Lehman's bankruptcy will impact India's largest private bank ICICI Bank partly. ICICI Bank, the same report says, will have to take a hit of US$28 million on account of the additional provisioning that ICICI Bank's UK subsidiary will have to make. ICICI Bank's UK subsidiary had investments of EUR57 million (around US$80 million) in senior bonds of Lehman Brothers, the Times notes. Broking house Edelweiss foresees the UK subsidiary would have to book mark-to-market losses of US$200 million. its subsidiaries. ----------------------------------------------------------------- [00046] METLIFE HAS $800-MIL. EXPOSURE TO LEHMAN AND AIG ----------------------------------------------------------------- MetLife, Inc. (NYSE: MET) said in a statement that its net direct investments in Lehman Brothers and AIG have an aggregate book value of approximately $800 million, including common stock of $10 million. MetLife said it is continuing to assess the recoverability of these investments. In addition, the company has made secured loans to affiliates of Lehman which are fully collateralized. MetLife's investments in AIG and Lehman include debt, equities and derivatives. MetLife, however, assured investors that it has a high quality, diversified portfolio. As of June 30, 2008, MetLife had a general account portfolio of $350 billion and shareholders equity of $33 billion. MetLife added that it has a strong balance sheet, substantial capital and remains very well positioned to fulfill its obligations. MetLife -- http://www.metlife.com// -- is a leading provider of insurance and financial services with operations throughout the United States and the Latin America, Europe and Asia Pacific regions. Through its domestic and international subsidiaries and affiliates, MetLife, Inc. reaches more than 70 million customers around the world and MetLife is the largest life insurer in the United States. ----------------------------------------------------------------- [00047] CANADA'S MANULIFE HAS $395-MIL. EXPOSURE TO LEHMAN ----------------------------------------------------------------- TORONTO, Canada -- Sept. 16, 2008 -- In light of recent events, Manulife Financial Corporation confirmed today that it has the following exposures (all amounts in US dollars unless stated otherwise) at the close of business September 15, 2008: -- Lehman Brothers * Fixed income investments with a par value of $383 million * Derivatives exposure, net of collateral, of $12 million * Securities lending, net of collateral, of nil -- American International Group Parent Holding Company: * Fixed income investments in the holding company with a par value of $38 million * Other exposures of $9 million Subsidiaries: * Fixed income investments with par value of: (a) American General $190 million (b) Sun America $15 million (c) Other $7 million * Other exposures of $31 million -- AIG Financial Products: * Derivatives exposure, net of collateral, of $84 million * Fixed income investments of nil -- Washington Mutual * Total exposures of $41 million "These amounts, in aggregate, represent approximately one- half of one per cent of our Cdn $164 billion in assets," noted Donald Guloien, Senior Executive Vice President and Chief Investment Officer. "In avoiding the perils of many other parts of the capital market, we made the decision to invest in what were deemed to be highly-rated, sophisticated and regulated financial institutions. While these developments are extremely disappointing, to date we have avoided the worst problems in the credit markets and our track record remains exemplary." The above holdings are predominantly held in segments backing liabilities, with approximately 70 per cent for the account of shareholders. Manulife Financial currently expects to record a charge to shareholders' earnings in the third quarter of 2008 with respect to some of these holdings. The amount of the charge is dependent on a number of factors, including the amount of expected recoveries and actuarial cash flow calculations which will be performed following the close of the quarter on September 30, 2008. "We continue to enjoy a strong balance sheet and among the highest credit ratings in the industry" noted Peter Rubenovitch, Senior Executive Vice President and Chief Financial Officer. "Our strong and diversified businesses worldwide position us well to compete in these challenging market conditions." About Manulife Financial Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers customers a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were Cdn$400 billion (US$393 billion) as at June 30, 2008. Manulife Financial is one of two publicly traded life insurance companies whose rated life insurance subsidiaries hold Standard & Poor's Rating Services' highest "AAA" rating. Its risk management framework is described as "Excellent" in Standard & Poor's' most recent ERM Level II report. The Company also placed first overall in the Globe and Mail's annual ranking of Corporate Governance in Canada. Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '0945' on the SEHK. Manulife Financial can be found on the Internet at http://www.manulife.com/ ----------------------------------------------------------------- [00048] JAPAN'S SHINSEI HAS $358-MIL. EXPOSURE TO LEHMAN ----------------------------------------------------------------- TOKYO, Japan -- September 16, 2008 -- In light of the weekend's unprecedented events in the global financial services sector, Shinsei Bank, Limited, believes it is important to communicate to the market in a timely manner its exposure to entities of Lehman Brothers Holdings Inc., which filed for bankruptcy protection on September 15, 2008, in New York. Shinsei believes it is well positioned to deal with the current challenging market conditions, given its liquidity and robust capital ratios. Shinsei's maximum exposure to Lehman is approximately 38 billion yen, largely comprised of an unsecured loan of 25 billion yen to a Japanese entity guaranteed by Lehman Brothers Holdings Inc., billion yen in bonds (notional amount), and market counterparty risk of 1 billion yen. Shinsei is taking prompt action to manage its exposure and maximize recovery. In addition, the bank has International Swaps and Derivatives Association/CSA agreements in place. * * * According to Bloomberg News, Shinsei Bank Ltd.'s shares fell to a record low in Tokyo trading after the announcement. Shinsei, which is partly owned by U.S. buyout firm J.C. Flowers & Co., dropped 9.9% to JPY283 as of 12:46 p.m. on the Tokyo Stock Exchange. The stock plunged 16% after Lehman filed for bankruptcy. ----------------------------------------------------------------- [00049] SUN LIFE HAS $349-MIL. EXPOSURE TO LEHMAN BROTHERS ----------------------------------------------------------------- TORONTO, Canada -- September 15, 2008 -- In response to today's announcement by Lehman Brothers Holdings Inc. of its intent to file a Chapter 11 bankruptcy petition, Sun Life Financial Inc. (TSX/NYSE: SLF) today announced that it holds $334 million par value of Lehman bond securities and approximately $15 million net value of Lehman derivative instruments. Sun Life Financial holds collateral security under collateral security agreements for its net derivative exposure to Lehman. Most of Sun Life Financial's Lehman exposure is held in segments backing liabilities. Under Canadian accounting rules, when a bond backing liabilities is written down in value or defaults, the actuarial assumptions about the cash flows required to support the liabilities will change, resulting in a strengthening of reserves with a corresponding charge to income. Sun Life Financial currently expects to record a charge to earnings in the third quarter of 2008 in respect of its Lehman holdings. The amount of the charge is dependent on a number of factors, including the amount of expected recoveries and actuarial cash flow testing which is performed following the close of the quarter on September 30, 2008. Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. As of June 30, 2008, the Sun Life Financial group of companies had total assets under management of CDN$413 billion. Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under ticker symbol SLF. ----------------------------------------------------------------- [00050] BANK OF CHINA HAS $50-MIL. EXPOSURE TO LEHMAN ----------------------------------------------------------------- Wang Zhaowen, spokesman for Bank of China Ltd., says Bank of China is closely watching its holdings of unsecured credit issued to Lehman Brothers Holdings Inc, CNNMoney.com reports. Bank of China New York Branch is on the list of 30 largest unsecured creditors owed more than by Lehman, with a $50,000,000 claim for a bank loan. "At present we have no information to disclose, but relevant departments of Bank of China have been investigating the deal," Mr. Wang told Dow Jones Newswires, the report says. ----------------------------------------------------------------- [00051] ING HAS EUR200M EXPOSURE, SEES EUR100M IMPACT ON INCOME ----------------------------------------------------------------- Netherlands, Amsterdam-based ING informed stakeholders that the total direct impact of Lehman Brothers' Chapter 11 filing on its profit and loss account is estimated to be around EUR 100 million on a pre-tax basis: * The gross lending and bond exposure is approximately EUR200 million. Taking into account hedges and collateral, the expected impact of these positions on the pre-tax P&L is around EUR 40 million. * ING is currently executing an orderly settlement of transactions and is in the process of replacing derivative positions. ING estimates the impact of these actions at around EUR60 million on the pre-tax P&L, based on current market prices. ING is a global financial institution of Dutch origin offering banking, investments, life insurance and retirement services to over 85 million private, corporate and institutional clients in more than 50 countries. With a diverse workforce of about 130,000 people, ING is dedicated to setting the standard in helping our clients manage their financial future. ING Groep's Taiwan life insurance unit has TW$1.1 billion (US$34 million) in collective exposure to Lehman Brothers, Merrill Lynch and AIG,John Wylie, chief executive officer of ING Life Taiwan, told Reuters. ----------------------------------------------------------------- [00052] S&P DOWNGRADES LEHMAN BROTHERS HOLDINGS TO "D" ----------------------------------------------------------------- NEW YORK, New York -- Sept. 16, 2008 -- Standard & Poor's Ratings Services said today that it changed its counterparty credit rating on Lehman Brothers Holdings Inc. (LBHI) to 'D' from 'SD'. We also lowered our senior and subordinated debt issue ratings on LBHI, and the ratings on certain issues guaranteed by LBHI to 'D'. These rating actions follow our review of LBHI's bankruptcy filings. "We anticipate that LBHI will default on all or substantially all of its obligations as they become due," said Standard & Poor's credit analyst Scott Sprinzen. Complete ratings information is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at http://www.ratingsdirect.com/ All ratings affected by this rating action can be found on Standard & Poor's public Web site at http://www.standardandpoors.com/; select your preferred country or region, then Ratings in the left navigation bar, followed by Credit Ratings Search. ----------------------------------------------------------------- [00053] S&P PLACES 3 CMBS DEALS ON NEG. WATCH DUE TO EXPOSURE ----------------------------------------------------------------- NEW YORK, New York -- Sept. 16, 2008 -- Standard & Poor's Ratings Services today placed its ratings on seven classes from three U.S. commercial mortgage-backed securities (CMBS) transactions on CreditWatch with negative implications. The CreditWatch placements follow the recent rating actions on various Lehman Bros. entities, as detailed in "Research Update: Lehman Bros. Holdings Downgraded To 'Selective Default'; Other Lehman Entities To 'BB-' Or 'R'," published Sept. 15, 2008, and "Research Update: Lehman Brothers Holdings Inc. Rating Lowered To 'D'," published Sept. 16, 2008. Standard & Poor's rates each floating-rate class from the three CMBS transactions according to our view of the likelihood that certificateholders will receive timely interest and the ultimate repayment of principal. Each transaction is collateralized entirely by fixed-rate commercial real estate loans. An interest rate swap agreement is in place for the floating-rate classes, with Lehman Bros. Special Financing Inc. acting as the counterparty. Lehman Bros. Holdings Inc. (D/--/D) guarantees the obligations of Lehman Bros. Special Financing Inc. The transactions are structured with a conversion feature that adjusts the pass-through rate to the certificateholders from a floating to a fixed rate if the swap is terminated. Although the conversion feature should prevent a payment interruption to the rated classes if the swap counterparty is not replaced, the conversion feature is untested in practice, and we will monitor the situation closely. Standard & Poor's will update or resolve the CreditWatch placements following either the replacement of the swap counterparty or the implementation of the conversion feature. Standard & Poor's is also in the process of evaluating the transactions' documents and speaking to participants to update or resolve the placements. RATINGS PLACED ON CREDITWATCH NEGATIVE LB Commercial Mortgage Trust 2007-C3 Commercial mortgage pass-through certificates Rating --------------------- Class To From ----- -- ---- A-2FL AAA/Watch Neg AAA A-4FL AAA/Watch Neg AAA A-MFL AAA/Watch Neg AAA A-JFL AAA/Watch Neg AAA LB-UBS Commercial Mortgage Trust 2007-C6 Commercial mortgage pass-through certificates Rating --------------------- Class To From ----- -- ---- A-2FL AAA/Watch Neg AAA A-MFL AAA/Watch Neg AAA LB-UBS Commercial Mortgage Trust 2008-C1 Commercial mortgage pass-through certificates Rating --------------------- Class To From ----- -- ---- A-2FL AAA/Watch Neg AAA Analytic services provided by Standard & Poor's Ratings Services (Ratings Services) are the result of separate activities designed to preserve the independence and objectivity of ratings opinions. The credit ratings and observations contained herein are solely statements of opinion and not statements of fact or recommendations to purchase, hold, or sell any securities or make any other investment decisions. Accordingly, any user of the information contained herein should not rely on any credit rating or other opinion contained herein in making any investment decision. Ratings are based on information received by Ratings Services. Other divisions of Standard & Poor's may have information that is not available to Ratings Services. Standard & Poor's has established policies and procedures to maintain the confidentiality of non-public information received during the ratings process. Ratings Services receives compensation for its ratings. Such compensation is normally paid either by the issuers of such securities or third parties participating in marketing the securities. While Standard & Poor's reserves the right to disseminate the rating, it receives no payment for doing so, except for subscriptions to its publications. Additional information about our ratings fees is available at http://www.standardandpoors.com/usratingsfees ----------------------------------------------------------------- [00054] A.M. BEST DOWNGRADES LEHMAN RE BERMUDA TO "bb" ----------------------------------------------------------------- A.M. Best Co. has downgraded the financial strength rating to B from A- and issuer credit rating to "bb" from "a-" of Lehman Re Limited. Based in Hamilton, Bermuda, Lehman Re Limited is a wholly owned reinsurance subsidiary of Lehman Brothers Holding Inc. The outlook for both ratings is negative. The decision of Lehman Brothers to petition for Chapter 11 bankruptcy protection has prompted these rating actions. While Lehman Re is not included in the bankruptcy petition, A.M. Best believes that the pending reorganization of Lehman Brothers could have a significant adverse impact on Lehman Re. A.M. Best had expected that the balance sheet of Lehman Brothers would be a source of capital for Lehman Re, if needed. A.M. Best also is concerned about the future of ongoing operating ties such as the securities activity between Lehman Re and other Lehman Brothers' affiliates, the administrative and investment management services provided to Lehman Re by other subsidiaries of Lehman Brothers and the inability of Lehman Brothers to refer potential insurance clients to Lehman Re. A.M. Best will continue to evaluate the impact of the Lehman Brothers' bankruptcy reorganization on Lehman Re. ----------------------------------------------------------------- [00055] FEDERAL RESERVE TURNS BACK ON LEHMAN BUT SAVES AIG ----------------------------------------------------------------- After turning its back on Lehman Brothers, the Federal Reserve Board said September 16, that with the full support of the Treasury Department, it has authorized the Federal Reserve Bank of New York to lend up to $85 billion to American International Group (AIG) under Section 13(3) of the Federal Reserve Act. The secured loan has terms and conditions designed to protect the interests of the U.S. government and taxpayers. "The Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth, and materially weaker economic performance." The Federal Reserve Board added that the purpose of this liquidity facility is to assist AIG in meeting its obligations as they come due. This loan will facilitate a process under which AIG will sell certain of its businesses in an orderly manner, with the least possible disruption to the overall economy. The AIG facility has a 24-month term. Interest will accrue on the outstanding balance at a rate of three-month Libor plus 850 basis points. AIG will be permitted to draw up to $85 billion under the facility. The Federal Reserve assured taxpayers that their interests are protected by key terms of the loan. The loan is collateralized by all the assets of AIG, and of its primary non-regulated subsidiaries. These assets include the stock of substantially all of the regulated subsidiaries. The loan is expected to be repaid from the proceeds of the sale of the firm's assets. The U.S. government will receive a 79.9% equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders. As previously reported, subsequently after the announcement of Lehman's preliminary financial report for the quarter ending August 31, 2008, the firm had an emergency meeting on September 12, 2008, with officials from the New York branch of the Federal Reserve Bank, the heads of major financial institutions, Treasury Secretary Henry Paulson, and SEC Chairman Christopher Cox. However, U.S. government officials indicated that emergency federal funding would not be forthcoming to stabilize Lehman Brothers and provide the liquidity needed for its operations. This is in contrast to Fed's previous decision to help Bear Stearns stave off bankruptcy in March by backing JPMorgan's acquisition of the bank, and its takeover of mortgage-finance companies Freddie Mac and Fannie Mae. "The situation in March and the situation and facts around Bear Stearns were very, very different with what we were looking at in September," Mr. Paulson said. "I never once considered it appropriate to put taxpayer money on the line in resolving Lehman Brothers." Barclays Bank has previously considered a take over of Lehman to save it from bankruptcy. Barclays, however, pulled out because it couldn't obtain guarantees from the government or other Wall Street firms to protect against potential losses on Lehman's assets. Lehman's bankruptcy filing and the near collapse of investment bank Merrill Lynch and insurance giant AIG have caused worldwide financial turmoil. The U.S. Federal Reserve's decision to lend up to $85 billion to AIG, in exchange for its 80% stake, however, has brought some reprieve. Bank of America, which was also involved in talks to buy Lehman, has agreed to buy Merrill Lynch for $50 billion, averting another collapse by an investment bank. AIG has retained the law firm of Weil, Gotshal & Manges LLP -- Lehman Brothers' counsel -- for corporate restructuring advice. *** End of Issue No. 3 ***