Lehman Brothers’ embattled Chief Executive Dick Fuld nearly struck a deal to raise almost $5 billion from South Korean wealth funds and institutions but the pact disintegrated, according to sources familiar with the matter.
It’s unclear why the deal fell apart earlier this month, although one source speculated that Lehman was aiming to raise more capital than the Korean investor was willing shell out at the time.
The precise terms of the deal could not be learned.
Fuld and his newly appointed lieutenant, COO and President Bart McDade, have been in numerous discussions with prospective investors about raising additional capital internationally.
Lehman needs the extra cash as protection against expected losses as it looks to unload tens of billions of dollars in commercial mortgage securities and other real-estate assets.
A JPMorgan Chase analyst wrote on Monday that Lehman may writedown about $4 billion when it reports fiscal third-quarter earnings next month.
The Lehman CEO has been working to forge a deal with Korean entities since earlier in June, when he sought to raise an estimated $6 billion.
However, those negotiations never culminated in a deal, sources said.
In an effort to keep Lehman intact, Fuld is trying to shop Lehman’s asset-management unit, which includes its Neuberger-Berman unit and is said to be worth as much as $10 billion, to private-equity firms.
He’s pushing for a creative provision that would allow Lehman, by offering warrants, to get a chance in the future to buy back what it sells if the investment bank is still around, sources said.
Purchased for $2.6 billion, the asset-management unit was acquired as a part of an initiative to cast Lehman as more than just a vaunted bond shop.
As reported by The Post, Lehman has been in talks with private-equity firms to acquire Neuberger-Berman and recent media reports have identified Apollo Management, Blackstone Group and Kohlberg Kravis Roberts as receiving initial marketing materials.
Lehman declined to comment.
The news of Lehman’s planned sale sent its shares tumbling more than 13 percent to $13.07 a share at yesterday’s close. In the aftermarket the stock fell another 30 cents to $12.77. Lehman’s market cap is now below $9 billion. In March, at the time of Bear Stearns collapse Lehman had a market cap of roughly $21.6 billion.