Lehman’s $620m Asian assets disposal eases creditors’ load

Lehman’s $620m Asian assets disposal eases creditors’ load
By Robert Cookson in Hong Kong

Published: June 21 2010 18:42 | Last updated: June 21 2010 18:42

The Hong Kong-based liquidators of Lehman Brothers’ Asian operations have sold $620m of the failed investment bank’s portfolio of loans, bonds and equity positions in the region.

The transactions, which achieved an average recovery rate of 100 per cent, represent the first major disposals from the $2.6bn “principal investments and loans” portfolio built up by Lehman.

The sales are likely to provide some comfort to Lehman’s creditors, who had worried about the ability of liquidators to dispose of assets without taking big losses.

Warren Phillips, the KPMG partner in charge of the disposals, told the Financial Times that his team was close to selling a further $300m of the portfolio, which is mostly comprised of investments in China and India.

“I’ve been surprised by how quickly the values of some of these assets have come back,” he said.

Most of the transactions so far have involved the sale of assets back to the issuer or borrower, a tactic KPMG has employed in divesting a separate portfolio of Asian property loans and bonds.

About $200m of the disposed assets were “pre-IPO” investments Lehman had made in Chinese companies ahead of planned stock market flotations, which then failed to materialise because of the financial crisis.

Ruinian International, a Chinese health food group that listed in Hong Kong in February, was one of 15 companies that had bought back the Lehman stakes as markets have recovered, Mr Phillips said.

But while many of the most liquid assets in the portfolio are off the books, KPMG is still seeking to offload more than $1bn of loans, bonds and equity stakes that could be harder to shift.

The liquidators are faced with a complex range of legal and regulatory jurisdictions across Asia, some of which are unsympathetic to foreign creditors.