Lehman Brothers Holdings Inc may need to raise billions of dollars in new capital as it prepares to report a loss in its first quarter, according to a report.
The company may announce the capital raising when it reports quarterly results due the week of June 16, people familiar with the matter told the Wall Street Journal. The amount of capital being sought is not known, but analysts and Wall Street executives expect it to be between $3 billion and $4 billion, the report states.
Lehman still has a lot of exposure to the mortgage market, and they are going to need capital to get through it, said UBS analyst Glenn Schorr.
The amount would likely be raised by issuing common shares, diluting the stock of current shareholders, people familiar with the matter told the Journal.
On Monday Oppernheimer & Co analyst Meredith Whitney reversed her earlier profit forecast to a loss. Also, Merrill Lynch analyst Guy Moszkowski lowered Lehman's stock rating to underperform from neutral.