NEW YORK — Lehman Brothers Holdings Inc. on Tuesday denied it was forced to tap the Federal Reserve’s discount window to stave off cash problems, and maintains that its books remain liquid.
The nation’s fourth-biggest investment bank was battered Tuesday amid reports it needs to raise up to $4 billion of capital because of steep losses linked to the ongoing credit crisis. The securities firm is set to report its first loss this month since splitting off from American Express Co. in 1994.
Shares of the company tumbled 15 percent Tuesday after market rumors surfaced that it was forced to borrow from the Fed’s discount window to maintain operations. After the company’s denial of approaching the Fed, shares slipped $3.22, or 9.5 percent, to close at $30.61.
“We did not access the primary broker-dealer facility,” said Paolo Tonucci, Lehman’s treasurer. “The last time we accessed the facility was on April 16 for testing purposes. We ended the first quarter with liquidity of $34 billion and finished the second quarter with well over $40 billion.”
Richard X. Bove, an analyst with Ladenburg Thalmann, said raising about $4 billion through the market would result in the issuance of 120 million new shares. He said that would dilute future results by 15 percent to 20 percent, and that caused shares to plunge Tuesday.The Associated Press
