Lehman Making Steady Progress on Asset Sales

Erin Callan is no doubt enjoying the last days of summer in East Hampton. And with another glorious day on tap Wednesday she is certainly in a better spot than her old boss.

Dick Fuld is feverishly working on a myriad of deals; it would seem that everything is on the table, including the disposition of one of their asset management operations to private equity buyers and a potential sale/leaseback of the Times Square HQ. And given the lack of trust that pervades the Street, Fuld is taking on much the work himself:

Lehman’s talks with private equity firms have been conducted in secret and largely directed by Dick Fuld, its chief executive. “Lehman does not trust anyone these days so it has always been direct communication,” one potential buyer said.

Analysts say the situation at Lehman reflects the uncertainty over the size of its writedowns. JPMorgan last week estimated the writedowns could total $4bn, but people familiar with the situation say they could be bigger. FT

I find it utterly comical that people who two months ago had no idea Lehman owned Neuberger & Berman are now criticizing its potential divestiture. Of course, it has not helped the investment case for Lehman's stock, but has always been card Fuld held in his back pocket. Apparently he has whittled it down to three interested parties willing to buy Neuberger:

Lehman Brothers has told three private equity firms – Kohlberg Kravis Roberts, Hellman & Friedman and Bain Capital – that they remain in the bidding for its asset management arm even though the investment bank has yet to make a final decision on whether to sell the unit.

The Neuberger employees might be acting like a gang of petulant children at the moment; stomping their feet loudly in order to be heard above the din at 41st and Third.

They have to hammer acquirers hard on compensation related issues, and no doubt feel they have something coming their way after watching Lehman’s stock fall apart over the past year. And no doubt some of them are holding talks with interested parties who would love to see them jump ship; if they can get the clients to follow they might not be sacrificing much in leaving, assuming there are no other handcuffs keeping them at Lehman.

Sure, some of them manage mutual funds and are stuck, but some of the private client groups might be able to pack up their volleyball’s and beat a hasty retreat. Right, Spike?

And, much like Bear Stearns, they have a choice midtown office building that can be mortgaged in a pinch:

...the Lehman Brothers building is one of the highest regarded office towers in Manhattan, as well as one of the newest.

“It’s a high quality property, very well built and located,” says Colin Thomasson, managing director at real estate advisers DTZ.

Its huge open-trading floors and new electrical infrastructure are the sort of features that makes real estate investors salivate.

“[Lehman] are very, very proud of that building,” says The Rockefeller Group, which developed and still manages the site. FT

It would appear that Dick Fuld is channeling Crazy Eddie, and though he might not be insane, everything must go.

No reasonable offer will be refused, and if Dick can pawn a few assets he might just survive, which is sure to raise the hackles of those folks calling for his head, even if they don’t own the stock or otherwise have skin in the game.

Dick deserves to be fired, but that does not mean he will be.
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Meredith Whitney must be on vacation, so we have Dick Bove’s latest take on things, filmed Monday. Dick has some valid points, but nobody can hear them above the catcalls.

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Private equity groups in running for Lehman unit
FT

Lehman Brothers can bank on sky-high asset
FT
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