Analysts see Bear Stearns-like fate for Lehman at worst

(Reuters) - The most attractive option for Lehman Brothers Holdings Inc is to reduce troubled assets and raise capital, according to at least two analysts, who see a Bear Stearns-like bailout for Lehman in a worst case scenario.

Not ruling out a buyout by the management, Fox-Pitt Kelton's David Trone said, in a note dated Sept 9, that Lehman could sell its investment-management unit and fund the entire tender.

The management would surely be willing to pay more than a strategic buyer as they know Lehman's "problem" assets better than anyone, said Trone, who believes that Lehman needs $5 billion in net capital.

In any event, Trone believes deal scenarios would have current shareholders getting $10 a share to $15 a share.

Banc of America's Michael Hecht also said the "best case" scenario for common equity holders is that Lehman "limps along" and gets by with a partial reduction of its troubled asset exposure by raising dilutive capital and selling a portion of its investment-management unit.

Widening his third-quarter loss-per-share view by 39 percent to $4.80, Hecht said in a research note on Tuesday that a Bear Stearns-like bailout will likely leave little value for common stockholders of about $2 per share.

Lehman has been in talks with investors on possible capital infusions and some analysts expect it to spin off or otherwise dispose of much of its commercial real estate portfolio.

The investment bank has also been looking out for investors to buy a piece of its investment-management unit, which includes the profitable asset-manager Neuberger Berman.

Shares of Lehman fell as much as 46 percent on Tuesday, wiping out $4.4 billion in market value on concerns that the Wall Street investment bank will not be able to raise capital it desperately needs to survive the global credit crisis.

(Reporting by Sweta Singh in Bangalore; Editing by Himani Sarkar)