Lehman Brothers Holdings’ bid to keep Sam Zell’s Equity Residential from purchasing a 25.6 percent stake in apartment company Archstone met its first hurdle, Bloomberg News reported, when a bankruptcy judge rejected Lehman’s preliminary injunction Friday. Equity Residential, which hopes to buy the stake from Bank of America and Barclays PLC, is allowed to exercise its option to purchase the stake, the ruling says.
Lehman is “cash-rich,” U.S. bankruptcy Judge James Peck said. Lehman has said it wants to sell Archstone for $6 billion to help pay creditors, but first needs to gain control by buying the banks’ stakes. Zell’s Chicago-based company argued it had spent money pursuing the deal, and should not be blocked from bidding. The judge agreed.
The judge also said that on Nov. 30, Lehman had $27.2 billion of cash and investments, referring to filings. He expects Equity to bid about $1.4 billion for the stake.
The rejection of the injunction has no effect on the merits of Lehman’s case, Bloomberg reported. [Bloomberg]