October 20, 2009 / 3:19 PM / 10 years ago

Hedge fund loses $130 mln on shares held by Lehman

LONDON, Oct 20 (Reuters) - Hedge fund Harbinger Capital Partners said on Tuesday it had lost more than a quarter of its stake in sugar maker Tate & Lyle (TATE.L) as it has been unable to reclaim them from collapsed bank Lehman Brothers LEHMQ.PK.

Harbinger said 17.7 million shares — worth 80 million pounds ($131.4 million) at current prices — will not be recovered and further shares held by Lehman may also be lost.

The activist investor said the lost shares, held by its Special Fund, had been “rehypothecated” — deposited with Lehman Brothers in Europe (LBIE) prime brokerage and then sold on.

“The Special Fund believes at this time rehypothecated shares will not be recoverable,” Harbinger said in a statement.

“Certain non-rehypothecated shares were also held at LBIE and the timings and likelihood of the return of such shares is uncertain at this time,” the statement said, adding Harbinger still holds 42 million shares in Tate & Lyle, equivalent to 9 percent of the voting rights.

LBIE’s administrator, PricewaterhouseCoopers (PwC), said on Tuesday more than 1,500 clients had funds with LBIE at the time of its collapse.

“We have dealt with over $40 billion of assets already and are now focusing effort on agreeing claims,” said PwC’s Steve Pearson.

On Oct. 5 PwC said it had devised a new plan to dole out the collapsed investment bank’s assets after a court rejected a “scheme of arrangement” transaction in August. PwC’s appeal against the court’s ruling will be heard on Oct. 26. (Editing by David Holmes) ($1=.6088 Pound)

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