MutualFundWire.com: Judge Oks Lehman's Neuberger Stake Sale
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Wednesday, December 14, 2011

Judge Oks Lehman's Neuberger Stake Sale


A bankruptcy court judge has given the greenlight to Neuberger Berman Group LLC's [profile] purchase of Lehman Brothers Holdings' remaining 48-percent stake in the asset manager.

Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York on Wednesday gave his blessing to the transaction, which will yield about $1.5 billion in aggregate proceeds.

New York City-based Neuberger Berman and its employees will acquire common equity held by the Lehman estate over the next five years. At present, Neuberger workers own 52 percent of the firm's common equity.

Neuberger Berman will also redeem the preferred equity held by Lehman.

Funding for the equity purchases will come from the firm's free cash flow and additional purchases by employees.

"Since the terms were announced, feedback from clients and employees has been overwhelming," said Neuberger chairman and CEO George Walker in a press release. "We look forward to this transaction closing in 2012."
Press Release

NEW YORK, Dec 14, 2011 -- Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York today approved the transaction through which Neuberger Berman Group LLC will acquire Lehman Brothers Holdings Inc.'s remaining 48% minority equity interest in the company.

The terms of the transaction will generate approximately $1.5 billion in aggregate proceeds -- almost double what would have been generated by an offer received in 2008.

As described in the December 9, 2011 amended motion with the court, Neuberger Berman and its employees will purchase common equity held by the Lehman estate over the coming five years. Neuberger Berman, established in 1939 and independent for most of its history, completed an employee-led buyout of the firm in May 2009. Currently, Neuberger Berman employees own approximately 52% of the common equity.

George Walker, Chairman and CEO of Neuberger Berman said, "Since the terms were announced, feedback from clients and employees has been overwhelming. They share our enthusiasm for us moving towards 100% employee-ownership over the next handful of years. We look forward to this transaction closing in 2012."

The outstanding preferred equity held by Lehman, along with a portion of its common equity holdings, will be redeemed at the closing of any transaction. Sources of funds for equity purchases, to occur in increments of approximately 20% or more over the next five years, will include the company's free cash flow and additional purchases by employees.

William J. Fox and Jack D. McCarthy, Jr., managing directors with Alvarez & Marsal, have overseen the estate's Neuberger Berman relationship since May 2009.

"This transaction achieves an excellent return for Lehman creditors," said Mr. Fox, "at a significantly higher value than could have been achieved at earlier stages in the bankruptcy. The strategy we have followed has provided an optimal result for all constituents."

Mr. McCarthy added: "This transaction clearly positions Neuberger Berman for continued success and simultaneously delivers maximum value to Lehman's creditors. We are very appreciative of the input we received from the "ad hoc group" of creditors in advocating for the best return possible for the estate and for the support we've received from the Official Committee of Unsecured Creditors."

SOURCE: Lehman Brothers Holdings Inc.



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