Lehman Brothers Financial SA (LEHNQ)

[SwissCheeseAccount]

Logic & Reasoning:

ECAP holders prospectus says in the event of bankruptcy they will receive substituted preferred equity shares -->

LBHI is trying to issue ECAP holders substituted preferred equity shares as per their prospectus -->

If LBHI succeeds in issuing ECAP holders their substituted preferred equity shares, that would mean LBHI is honoring the ECAPS prospectus -->

If the ECAP prospectus is being honored, then it will also be honored that the substituted preferred equity shares will be listed on a stock exchange since you can not honor a portion of a contract -->

If ECAP prospectus is being honored by law, TRUP holders being the most senior preferred of LBHI must benefit also as they are the most senior preferred and have pari-passu provisions.

link to ecap prospectus:

https://www.bancobest.pt/ptg/bestsite/best_docs/lehman_xs0215349357.pdf

If a Trigger Event occurs and is continuing, the General Partner will, provided that (if required at such time) no relevant Supervisory Authority has objected, take all reasonable steps to cause the substitution of the Preferred Securities with depositary shares representing fully paid non-cumulative preferred stock issued directly by Lehman Brothers Holdings Inc. (“LBHI”). A Trigger Event shall occur (i) if LBHI is placed into bankruptcy, reorganization, conservatorship or receivership, (ii) if following any time when LBHI becomes subject to Relevant Rules, LBHI has capital adequacy levels which are less than the minimum capital adequacy levels which are imposed by the relevant Supervisory Authority or (iii) if, following any time when LBHI become subject to Relevant Rules, the relevant Supervisory Authority in its sole discretion, informs LBHI that it will not meet its minimum capital requirement in the near term.

Although LBHI has undertaken that, in the event that the Preferred Securities are substituted by depositary shares representing Substituted Preferred Stock, LBHI will apply for a listing for the Substituted Preferred Stock outside of the United States, there can be no assurance that a recognized stock exchange will agree to list any such Substituted Preferred Stock. In addition, the tax treatment for holders of Substituted Preferred Stock may be different from that for Holders of the Preferred Securities.