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FACTBOX: Lehman plans sale, spin-off of assets
NEW YORK (Reuters) - Lehman Brothers Holdings Inc, the fourth-largest U.S. investment bank, announced on Wednesday plans to sell a majority stake in its investment management division and spin off real estate assets, as it posted a preliminary quarterly net loss of $3.9 billion.
These are the details of Lehman's plan:
SPIN-OFF OF COMMERCIAL REAL ESTATE ASSETS
-- The bank plans to spin off to its shareholders $25 billion to $30 billion of its commercial real estate portfolio.
-- The assets will be separated in a publicly traded company in the first quarter of 2009.
-- The new company will be called Real Estate Investments Global.
-- Lehman said the spin-off would strengthen its balance sheet and preserve the value of the commercial real estate portfolio for shareholders.
-- It said REI Global would be appropriately capitalized through the transfer of common equity and provision of debt financing.
-- REI Global's primary focus will be to maximize shareholder returns by selling assets or holding them to maturity.
-- REI Global will not make investments in new assets, and any excess cash flow is expected to be returned to shareholders.
TO SELL INTEREST IN INVESTMENT MANAGEMENT UNIT
-- The bank plans to sell a 55 percent stake in a subset of its investment management division (IMD).
-- The subset includes the asset management, private equity and wealth management businesses.
-- The subset excludes Lehman's middle market institutional distribution business and the minority stakes in external hedge fund managers.
-- Lehman said the sale will enhance its capital base.
-- It said the goodwill related to the asset management unit Neuberger Berman will be eliminated. That is expected to improve Lehman's Tier 1 ratio and generate an increase of more than $3 billion in tangible book value.
-- The IMD business would continue to operate under the Lehman and Neuberger Berman brands, and clients would continue to be able to access all of the capabilities of the bank.
-- Lehman said it was in advanced discussions with a number of potential partners for the IMD business and expects to announce the details of a transaction "in due course." (Reporting by Juan Lagorio; editing by John Wallace)
