Replies to post #8747 on Lehman Brothers Financial SA (LEHNQ)

[marayatano]

It is obvious that you don't understand how CTs are structured and you dont understand what the POR says. It is all spelled out in the POR very clearly.

I am sorry. I can no longer help you.

They best way to learn is to lose money.

Good night and good luck.

imo

[hestheman]

Maratanyo is correct that the BK trumps the prospectus. That is why (for now) the Q's remain and they do not have to pay us dividends because while they are paying BK approved claims they are under a protective order. However, because we are in a chapter 11 LIQUIDATION scenario should they pay off senior and junior debt in full (in accordance to the plan) and there is money to pay us, then our prospectus guarantee would thus again be valid and we would need to be paid FV of our shares. Our claim could not just be discharged if there is money in the kitty to pay us.

[hestheman]

This is where it gets interesting though. Maratanyo is incorrect when he states that it is a "misconception" that CT's are a hybrid of debt/equity. Maratanyo states "We are class 10B...period". Not quite. If you know how a trust preferred security is created what i'm about to say will make sense. Companies create a trust preferred security by creating a trust (hence the name trust preferred) issuing debt to a new entity, while that trust issues the trust preferred security/stock. Therefore, we ARE a security/equity albeit we were issued by that trust (or these sub bonds) that's why they call us a hybrid because we have characteristics of both equity and debt. This is why BNYM says we are class 10B but Weil firm insists we are class 12. Quite simply we are both. Here's a kicker... When BANK HOLDING COMPANIES issue trust preferred securities they are treated as capital (equity) rather than debt due to regulatory purposes. The main advantages trust preferred securities have for banks are favorable TAX treatment. In bankruptcy however, trust preferred securities are classified as debt. What could TPS be classified as if they survive reorganization? Answer: 3 words Old..Cold...Equity.