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The announcement sent the preferred stock issuedby (Nasdaq: into a tailspin Tuesday morning. The sharesw fell 65 percent to They closed Wednesdayat $8.50. The preferres stock recently more than doubled in pric e after the industrial bank of bankrupt Lehmamn Brothers said it would liquidate the sharedat $25 each. The preferred stock had tradedd as lowas $3 amid concerns over dividendc payments and fallout from Lehman’s September bankruptcy filing. Lehman Brotherz Bank, which is not going through thebankruptcy process, said it needs to keep the Capitalo Crossing preferred stock because it countsd as Tier 1 capital — a regulatory measurwe of a bank’s core financial strength.
“As a result, the will not be made and the Series D preferredf stock will continue to tradseon ,” Capital Crossing Preferres Corp. said in a recent regulatory filing. In Capital Crossing Preferred Corp. issued the preferred stock withan 8.5 percent annual dividend rate. The value of that preferred stock traded as lowas $3.0 on Sept. 16, the day after Lehman Brotherd filed forbankruptcy protection. In early Lehman bought Capital Crossing, whose business included buyingother banks’ troubled commercial for $210 million in cash. Capitapl Crossing executives citedLehman Brother’zs deep pockets and market clouy when heralding the deal.
But in September, Lehman’es stunning collapse and bankruptcy filintg reverberated aroundthe globe. Capital Crossing is owner by Lehman BrothersBank FSB, an industrial bank that continuess to operate. In May an entity called Capital CrossingPreferred Corp., whicb was set up like a completed a public offering of 1.5 milliojn preferred shares. The offering raised net proceedsof $35. 3 million, after offering costs of $2.2 million, U.S. regulatory filingzs show. The unit had about $118 million in assetsa at the endof June. Those assets included commercial mortgages with a heavy emphasies inCalifornia markets.
The loansw had a net balance ofabout $60 million at the end of
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