Tags: lehman | bonds | notes | invest | hong | kong

Lehman Noteholders in Hong Kong to Get 80%

Sunday, 27 Mar 2011 02:47 PM

Most Hong Kong holders of structured financial notes linked to Lehman Brothers Holdings Inc. will get more than 80 percent of their investment in the latest settlement, receiver PricewaterhouseCoopers LLP said.

The agreement, which covers most issues of the minibonds, will offer holders “significant recoveries” on their investment, according to statements by PricewaterhouseCoopers and 16 banks involved issued at a Bank of China Ltd. briefing in the city.

About 43,000 investors in Hong Kong bought an estimated $1.8 billion of Lehman minibonds that were sold by commercial lenders before the New York-based investment bank’s 2008 collapse. The bankruptcy triggered a slump in the value of the notes and sparked almost daily protests by buyers who said they had been misled.

“Litigation will be very time-consuming and costly, so we think this will be a very good result,” Ted Osborn, a Hong Kong-based partner at PricewaterhouseCoopers, said at the briefing, declining to give a specific amount for the latest settlement.

The agreement will allow investors to recoup about 70 percent to 90 percent of cash, according to the statement from 16 banks.

BOC Hong Kong (Holdings) Ltd., the Bank of China’s Hong Kong unit, and 15 other banks agreed to pay at least 60 cents on the dollar, for a total of HK$6.3 billion, in a settlement reached with the Securities and Futures Commission and the Hong Kong Monetary Authority.

BOC, the biggest seller of the notes in the city, offered in July 2009 to pay HK$3.11 billion ($400 million) to the Lehman minibond investors, almost half the total compensation extended by the 16 banks, while two units of Dah Sing Financial Holdings Ltd. will pay HK$444 million.

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