Lehman Brothers Financial SA (LEHNQ)

[linda1]

You have taken out of context what the meaning is - which is what the Guarantee says not to do.


"The following summary of the material terms of the guarantee is not intended to be complete and is qualified in all respects by the applicable prospectus supplement, the guarantee, the Trust Indenture Act and other applicable law."



The Prospectus/ Guarantee is 60 pages and it mainly defines the Capital Trust Preferred Securities and the rights of the Capital Trust Holders when LBHI was NOT IN BANKRUPTCY.


The Capital Trusts use to trade on the NYSE and receive quarterly dividends before the LBHI bankruptcy.


What this part of the Guarantee is meaning is that the Capital Trusts are on a parity with most Senior Preferred and Preference Stock in rights of payment of dividends etc - while LBHI is NOT IN BANKRUPTCY.


All other liabilities of LBHI have right of payment to the dividends paid to the Capital Trusts and Senior Preferreds.


This is outlined in more detail in other sections of the Prospectus/Guarantee.


The sections of the Prospectus/Guarantee that you need only to be concerned about is where it specifically mentions a bankruptcy.


In the event of a bankruptcy the Capital Trusts are higher in priority due to that the Capital Trust Preferred Securities are linked to a Trust that holds subordinate bonds/notes that are considered to be debt and it is LBHI's obligation to pay that debt.


The Senior Preferreds and other preferreds are considered to be equity and are not debt and so they can be cancelled in a bankruptcy which is exactly what has happened.




Status of the Guarantees


The guarantee will constitute an unsecured obligation of Lehman Brothers Holdings and will rank:

•
subordinate and junior in right of payment to all other liabilities of Lehman Brothers Holdings,

•
on a parity with the most senior preferred or preference stock now or hereafter issued by Lehman Brothers Holdings and with any guarantee now or hereafter entered into by Lehman Brothers Holdings in respect of any preferred securities of any affiliate of Lehman Brothers Holdings, and

•
senior to Lehman Brothers Holding's common stock.