Harbinger Loses $130M In Shares Due To Lehman Bankruptcy

Oct 23 2009 | 12:14pm ET

While some clients of Lehman Brothers’ European prime brokerage may soon get some of their frozen assets back, that’s of little comfort to activist hedge fund Harbinger Capital Partners.

The New York-based firm said this week that more than a quarter of its stake in sugarmaker Tate & Lyle—worth more than US$130 million—had been written down last year. Worse still, more stocks owned by Harbinger and held by the bankrupt bank may also be gone forever.

Harbinger still owns 9% of Tate & Lyle.

“The special fund believes at this time rehypothecated shares will not be recoverable,” Harbinger said in a statement, referring to shares that were deposited at Lehman Brothers International Europe and then sold on. “Certain non-rehypothecated shares were also held at LBIE and the timings and likelihood of the return of such shares is uncertain at this time.”

The hedge fund did say it is "likely to receive value for shares posted to LBIE
prior to the administration proceedings," and that "the situation regarding Harbinger’s investment in Tate & Lyle is not new."

Some US$11 billion in prime brokerage assets have been frozen as part of Lehman’s bankruptcy proceedings in London. This week, a judge ruled that about US$3.3 billion of that could be returned by the court-appointed administrator for LBIE, PricewaterhouseCoopers.

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