24 hours of Lehman’s

(OK, OK, weak pun.  Bloggin’ ain’t easy!)

So some consortium is supposedly looking at buying Lehman Brothers.

But read the article carefully:

While the details of any proposal haven’t yet been fully worked out, a bid from the BofA-led group may involve losses for holders of the debt as well as shareholders.

Well sure, the firm looks like a steal, except for those, you know, liabilities…

I am with Yves:  I do not see how it is possible for the bondholders to take a haircut in the context of a sale.  You are not supposed to be able to buy a company’s assets and then just renege on its debt.  Not in the country I used to think I lived in.  But apparently, that is what these bidders are trying to do.

Lehman’s 6-month bonds now yield 34%, so the bond market is either taking this seriously or doubting we get a sale at all.  (Note that if the bondholders lose anything under any circumstances, then the shareholders should lose everything, which would make LEH a short even at $3.50.  Then again, I used to think you could not buy a company without also buying its debt, so you should probably ignore my investment advice…)

But hey, at least Lehman still has friends.  My first reaction to that picture was to laugh.  Now, I feel like crying.  Perspective is an odd thing.