Lehman brothers said on Monday it would sell three million shares to raise at least $3 billion in a bid to reduce concern that it is running short on capital.
In addition, 450,000 additional shares may be bought up by the underwriter if it sells more than the initial allotment.
Given the challenging environment and our previously stated view that it will likely continue the balance of the year, issuing convertible preferred is appropriate as it optimizes our funding and accelerates our plan to reduce leverage, and at the same time minimizes dilution to our shareholders, said Erin Callan, chief financial officer and managing director of Lehman Brothers in a statement.
She said the firm has received significant interest from institutional investors.
The company came under the glare of scrutiny in recent weeks after fellow investment bank Bear Stearns suffered a run on its assets, prompting intervention from the Federal Reserve and JPMorganChase which led to its prompt sale at a fire sale price.
Shares of Lehman were down 2.23 percent, or 94 cents to $36.80 in after hours trading.
Lehman said it would be the sole book-running manager of the offering. It will offer the shares under Lehman Brothers Holdings' existing shelf registration filed with the Securities and Exchange Commission.