Lehman Says Zell’s Archstone Option Would Enrich Banks
Lehman Brothers Holdings Inc. revised its lawsuit against Bank of America Corp. and Barclays Plc (BARC) to stop them from selling their remaining stake in real- estate company Archstone for almost $1.5 billion to Sam Zell’s Equity Residential. (EQR)
Bankrupt Lehman, which has said it wants to take control of Archstone, asked a judge to make the banks honor an earlier agreement that would have allowed Lehman to pay about $1.3 billion for the stake. The Zell company said on Feb. 21 that its minimum price would be $1.5 billion if it exercised an option to buy half of the banks’ stake, an increase from $1.3 billion earlier.
The banks would be unjustly enriched if Lehman was forced to match Zell’s price for the remaining stake, the defunct firm said in an amended complaint filed yesterday in Manhattan bankruptcy court.
The Zell company also would be unjustly enriched, as it is in line for a break-up fee if Lehman exercises its option to buy the banks’ remaining stake, Lehman said.
Archstone, which Lehman acquired in a $22 billion leveraged buyout with Tishman Speyer Properties LP, has ownership interests in hundreds of apartment developments from Washington and New York to San Francisco. Lehman and the banks made loans, which they later converted to equity after Archstone faltered in the 2008 credit crisis. Lehman previously owned 47 percent of Archstone.
The Zell company hasn’t contracted to buy the banks’ Archstone stake, it said last month.
The bankruptcy case is In re Lehman Brothers Holdings Inc. (LEHMQ), 08-13555, and the Archstone case is Archstone LB Syndication Partner LLC v. Banc of America Strategic Venture Inc. (In re Lehman Brothers Holdings Inc.), 11-02928, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Linda Sandler in New York at firstname.lastname@example.org.