CHICAGO-Lehman Bros., which today exited its four-year bankruptcy saga, has also filed an amendment to its lawsuit designed to block the sale of the rest of Denver-based Archstone to locally based Equity Residential. After two banks sold half of their share in Archstone in January, Lehman now owns 73.5% of the company.
Lehman sued Bank of America and Barclays Bank in its bankruptcy court in New York during late last year to delay or prevent them from selling 26.5% of Archstone to Equity. In early January, the court judge ruled that the banks could offer the interest to Equity, and Lehman, which had owned 47% of Archstone, was forced to buy the 26.5% for $1.3 billion to keep it out of Equity’s hands. Lehman calls Equity, chaired by Sam Zell, Archstone’s “biggest competitor.”
The banks want to sell their remaining 26.5% interest to Equity, but Lehman still has the right of first refusal to buy the shares. However, the banks granted an extension to Equity to make an offer for the shares, and allowed the price to increase. Now, the banks say Equity has until April 19 to offer $1.5 billion for the remaining shares.
Lehman filed an amended complaint on Monday to its original suit against the banks, asking the judge to rule the bank’s recent extension void for various reasons. For example, according to the complaint, Lehman says the banks have not provided enough timely documentation regarding their talks with Equity. Also, according to the complaint, the banks’ negotiations with Equity have not allowed Archstone to continue on with business as usual, such as completing a 2012 budget. The banks should be removed from all voting rights at Archstone, Lehman alleges in its complaint. Spokespeople for Equity and Lehman could not be reached for comment.
In a statement in late February, Equity said it stands to gain an $80 million break-off fee from Archstone if the Lehman uses its right of first refusal to purchase the banks’ last shares. Equity CEO David Neithercut said in his firm’s fourth quarter report that it would be silly to leave that much money on the table.
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