The way I see things...As CT holders..nothing has changed as long as LBHI is in business. As long as there is assets (Class 10b should be paid) The guarantee is only a guarantee
to be paid..If Lehamn makes payment to the trust. The Trust is not dicharged. If it was discharged.. The trust would be in default, and BNYM could demand redemption..So as it stands there is no claim unless in default. The cap trust is going through deferred (May be postponed for up to five years) If payment is not made after the five years regardless of assets or not..The trust would be in default..So let us focus on the deferral and what it means.
Holdings can, on one or more occasions, defer the quarterly interest payments on the subordinated debentures for up to 20 consecutive quarters unless the junior subordinated debentures are in default. In other words, Holdings may declare a five-year interest payment moratorium on the subordinated debentures. A deferral of interest payments cannot extend, however, beyond the maturity date of the subordinated debentures. See "Certain Terms of the Subordinated Debentures—Option to Defer Interest Payments" for more details.
If Holdings defers interest payments on the subordinated debentures, the trust will also defer distributions on the preferred securities. Any deferred distributions will accumulate additional amounts due at an annual rate of 6.24% compounded quarterly. Once Holdings pays all deferred interest payments on the subordinated debentures, with accrued interest, it can again postpone interest payments on the subordinated debentures as described above.
If Holdings defers payments of interest on the subordinated debentures, the subordinated debentures will at that time be treated as being issued with original issue discount for United States federal income tax purposes. This means you would be required to accrue interest income with respect to distributions (even if they are deferred) and include such amounts in your gross income for United States federal income tax purposes before you receive any cash distributions relating to such interest payments. See "United States Federal Income Tax Consequences" in the accompanying prospectus for more details.
Now the question has been asked will we get accrued consecutive quarters?
I think you would need to pay the taxes for each missed payment. If you did not pay your taxes on that interest. You will have no claim for the accrued interest
So what that tells me..After 20 the consecutive quarters. Lehman can make one payment and deferred for another 20 consecutive quarters. I feel at that time
We could see one interest payment. Now with that said.. The trust is still not in default. No default= no claim
All of the common securities of the trust will be owned by Holdings. The common securities will rank equally with the preferred securities, and payments on the common securities will be made on a proportionate basis with the preferred securities, unless Holdings (fails to pay amounts that become due under the subordinated debentures) or defaults under certain other circumstances described in "Description of the Junior Subordinated Debt Securities—Indenture Events of Default" beginning
LBHI can redeem the trust..doesn't mean they will...That is why we trade..Upon the Archstone IPO..LBHI could redeem in the form of preferred securities .Doesn't mean they will
That is just one means of redemption
Now read this
When Holdings pays off the subordinated debentures, either at maturity on January 18, 2054 or upon early redemption (as discussed above), the trust will use the cash it receives from the redemption of the subordinated debentures to redeem a like amount of the preferred and common securities. The redemption price for the subordinated debentures is 100% of their principal amount plus accrued and unpaid interest.
LBHI never said they will redeem..LBHI holdings can still hold the trust without redemption..make the one interest payment and we conntinue to trade..So we have a face value
of $25/trust..That is what it is..What the market prices the Trust at..The face value does not control..I am holding and when LBHI recovers. The trust will continue to trade at market price...Ethier way..I do not see a discharge of the trust..That would mean defalut and payment in full face value..BNYM as trustee would file the claim..If they failed to file a claim..You would need to take that up with BNYM
