The terms of British bank Barclays Plc's, planned acquisition of Lehman Brothers main North American businesses have been revised, pending court approval, amid declines in the securities market, attorneys for Lehman said on Friday.
Barclays had agreed to buy Lehman's North American investment banking and capital markets businesses for about $1.75 billion after Lehman filed for the largest bankruptcy in history. Most of that original price was for Lehman's New York headquarters and two data centers.
In the revised deal, which must be approved by the bankruptcy court, Barclays would absorb about $47.4 billion in securities and assume $45.5 billion in trading liabilities, attorneys said. The original deal called for $72 billion in securities and $68 billion in trading liabilities.
The appraised value of Lehman's real estate, which includes the Manhattan headquarters and two data centers, had been appraised at a lower-than-expected rate, the lawyers said in a hearing at the Bankruptcy Court for the Southern District of New York on Friday.
Lehman lawyer Harvey Miller told the court late Friday that the purchase price for real estate component of the deal would be $1.29 billion, including $960 million for Lehman's New York headquarters and $330 million for two New Jersey data centers.
Miller said that Lehman's original estimate valued its headquarters at $1.02 billion but that an appraisal from CB Richard Ellis this week valued it at $900 million.
Also in court, Martin Flics, a lawyer for the joint administrators of the Lehman European Group asked Lehman's chief operating officer about $8 billion in transfers made from the European business to the U.S. business on Friday before it went bankrupt.
PricewaterhouseCoopers, the UK administrator for Lehman, submitted a declaration to the court on Friday saying it felt the transfers were "potentially depriving them of billions of dollars in recoveries."
Flics also said the European and U.S. units share various information technologies and client contracts that there may be challenges separating the two businesses which for many years "have for many years operated as one."
Luc Despins, a lawyer for the creditors committee, said the creditors were not objecting to the sale, but not supporting it, either.
"The reason we're not objecting is really based on the lack of a viable alternative," Despins said, adding that they did not support the transaction because there has not been enough time to properly review it.
In other changes to the deal, Barclays will no longer purchase Lehman's Eagle Energy unit. It will acquire entities known as Lehman Brothers Canada Inc, Lehman Brothers Sudamerica, Lehman Brothers Uruguay and its Private Investment Management business for high net-worth individuals.
Lehman, however, will retain $20 billion of securities assets in Lehman Brothers Inc that are not being transferred to Barclays, they said.
Also, $700 million in cash no longer will be transferred to Barclays, the lawyers said.