Lehman Brothers (LEH) was pounded yet again yesterday on rumours that the $6 billion emergency financing the firm announced on Monday is in trouble. Forbes:
The losses accelerated into the market close on what TradeTheNews.com called “vague chatter” that the capital-raising plan had run into trouble. The report said speculation suggests that funds could renege on the deal before Thursday’s closing.
Obviously it is in the interests of the many traders who are short LEH to spread rumours like this. On the other hand, the $4 billion of common stock in the deal was priced at $28, and the stock closed yesterday at $23.75. It would not be a surprise, therefore, if the buyers of the deal were doing everything they could to back out of it–or at least renegotiate a lower price.
Lehman CEO Dick Fuld continues to be invisible as his firm’s market value and reputation crumbles. We can understand the early theory here–that having the CEO address the problem would make it seem more serious–but the time for that strategy is long gone. If the financing doesn’t close, Lehman could be in deep trouble, and the firm’s clients and shareholder deserve to hear from Fuld.
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