NEW YORK CITY-According to a report by Bloomberg, "Lehman Brothers Holdings Inc. has sued Bank of America Corp. and Barclays Plc. for breach of contract" following the bank contracting to sell an interest in Denver-based Archstone to Chicago-based Equity Residential. The suit has been "filed in US Bankruptcy Court in Manhattan," according to the Bloomberg story.
Lehman, which owns about 47% of Archstone, is exercising its right of first refusal and has offered to buy half of the banks’ 53% interest in the apartment company for $1.33 billion, according to the Bloomberg piece. The lawsuit "seeks to clarify the terms of Lehman’s right to buy the stake, to make the banks carry out their obligations under agreements and to postpone deadlines for the Equity purchase," according to the Bloomberg story.
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The troubled investment firm was just preparing to emerge from chapter 11 bankruptcy earlier this month when Equity announced its contract with Archstone to buy the 26.5% interest from the banks for $1.3 billion. The banks and Equity have been talking about the interest sale since Lehman opted out of an earlier negotiation this past summer, according to the Lehman filing.
Lehman fired back in an SEC filing that the Equity offer was not valid, as it was too low and that the proper documentation had not been filed.
If Lehman is able to buy the 26.5% of shares, giving it a majority 73.5% of Archstone, it’s not clear if Equity can still buy, or would offer to buy, the other 26.5%. Neither Equity nor Archstone have returned calls for comment.
Archstone has 48,922 apartment units, including 14,000 in Germany. Equity, owned by Sam Zell, owns or has investments in 417 properties in 15 states and Washington, DC. The company has said it would fund the purchase through cash, debt, sales and its $1.2 billion revolving credit facility. The Bloomberg story can be read here.
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