Lehman Brothers Use of Leaps

Lehman Brothers became the latest bank to take steps to shore up its funding , announcing that it will issue $3 billion of convertible preferred shares. Before its announcement, Lehman Chief Financial Officer Erin Callan told CNBC that the deal is sold. A group of large, long-term institutional investors in Lehman will receive a dividend yield of 7-7.5 percent, and the price being paid will mark a premium of between 30-35 percent on shares. Lehman shares fell nearly 5 percent in aftermarket trading after the planned offering was announced. There have been rumors surrounding Lehman since the demise of Bear Stearns, but Lehman says it has over $200 billion of assets it could sell or borrow against, and that its ability to borrow from the Federal Reserve should help with all the questions about its solidity. Lehman's decision to raise cash through a stock offering arrives just weeks after a cash-flow crisis