Lehman Brothers is considering releasing its second-quarter earnings a week earlier, and tying that announcement to news about a plan to raise capital, as the embattled investment bank looks to quiet doubts about its future, The Post has learned.
Lehman had planned to announce its second-quarter earnings sometime during the week of June 16, but a barrage of negative sentiment from short-sellers, including hedge fund manager David Einhorn of Greenlight Capital, has forced the investment bank to mull putting out its financial results sooner.
According to a person familiar with the matter, the earnings release would be coupled with an announcement that the bank is bolstering its balance sheet by injecting cash raised through an offering of shares known as a “rights offering.”
As it stands now, Lehman cannot directly address the negative reports that have bombarded it this week because it is in a so-called “quiet period” mandated by the Securities and Exchange Commission ahead of the public release of earnings information.
Led by CEO Richard Fuld, Lehman has stated adamantly that it is not in need of new capital and has some $40 billion in cash to weather any credit storm.
Nevertheless, the perception on Wall Street has become Lehman’s reality and anything the firm can do to beat back the naysayers may go far toward stemming the hemorrhaging its shares have seen this year.
Lehman’s stock has dropped about 53 percent in value since the start of the year. Its shares shed about 20 percent in value in the first two days of the week, but have recovered steadily since Wednesday.
Meanwhile, Lehman is said to have talked to a handful of institutional investors in the US and abroad to raise as much as $5 billion in capital, Bloomberg reported late yesterday.
Lehman declined to comment last night.
The collapse of rival investment banking firm Bear Stearns has put Lehman in the crosshairs of those aiming to make bearish bets that the firm might face a similar fate.
Bear and Lehman are perceived as big bond shops and both have been vulnerable to rumor mongering because they’re smaller than their peers. Bear was acquired by JPMorgan Chase in an unprecedented Federal Reserve-engineered deal.