FINWIRE®

Lehman Brothers prices $4.0 billion offering of convertible preferred stock

April 11th, 2008

Lehman Brothers Holdings Inc. announced that it had priced a $4.0 billion offering of 4,000,000 shares of 7.25% Non-Cumulative Perpetual Convertible Preferred Stock, Series P, with a par value of $1.00 per share and a liquidation preference of $1,000 per share (the “Preferred Stock”).

Each share of the Preferred Stock will be convertible at any time, at the option of the holder, into 20.0509 shares of Lehman Brothers Holdings Inc.’s common stock, which represents an initial conversion price of approximately $49.87 per common share.

The Firm said it conducted the offering after receiving substantial interest from several key long-term clients and institutional investors.

As previously stated by the Firm, the proceeds from the offering will be used to bolster its capital and increase financial flexibility.

“The significant oversubscription for this deal demonstrates the confidence that investors have in Lehman Brothers.

The success of the transaction is also reflective of the strength of the business model, the capital base and liquidity profile of the Firm as we continue to successfully weather challenging environments,” said Erin Callan, managing director and chief financial officer of Lehman Brothers and a member of the Firm’s executive committee.

The Firm will pay dividends on the Preferred Stock quarterly in arrears on January 1, April 1, July 1, and October 1 of each year, beginning July 1, 2008, at a rate of 7.25% per annum, if and when declared by its board of directors.

The conversion rate and the conversion price will be subject to adjustments in certain circumstances. On or after April 1, 2013, the Firm may, at its option, cause some or all of the Preferred Stock to be converted into shares of its common stock at the then applicable conversion rate if, for 20 trading days during any period of 30 consecutive trading days, the closing price of its common stock exceeds 130% of the then applicable conversion price of the Preferred Stock.

The Firm intends to apply to list the Preferred Stock on the New York Stock Exchange.

Lehman Brothers Inc. served as sole book-running manager of the offering of Preferred Stock.

The offering has been made under Lehman Brothers Holdings’ existing shelf registration statement filed with the Securities and Exchange Commission.
When available, copies of the prospectus supplement and accompanying prospectus relating to the offering can be obtained from Lehman Brothers Inc., c/o Broadridge, Integrated Distribution Services, 1155 Long Island Avenue, Edgewood, NY 11717, telephone: 1-888-603-5847 fax: 631-254-7140, or email: qiana.smith@broadridge.com.

Lehman Brothers, an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide.

Founded in 1850, Lehman Brothers maintains leadership positions in investment banking, equity and fixed income sales, trading and research, private investment management, asset management and private equity.

The Firm is headquartered in New York, with regional headquarters in London and Tokyo, and operates in a network of offices around the world.

For further information about Lehman Brothers’ services, products and recruitment opportunities, visit the Firm’s Web site at www.lehman.com.

Lehman Brothers Inc. is a member of SIPC.

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