Lehman Brothers sues Intel over a billion dollar deal
Bankrupt bank claims tech firm breached swap agreement
Bankrupt investment firm Lehman Brothers is suing Intel over accusations that it had seized $1bn in collateral in breach of a swap agreement.
The bank synonymous with the global financial meltdown told New York's bankruptcy court in a filing that Intel had taken more than its fair share out of its subsidiary Lehman Brothers OTC Derivatives (LOTC) after it went bust.
According to the filing, the firms had an agreement back in 2008 whereby LOTC would give $1bn to Intel in exchange for 50.5 million of Chipzilla's shares to be delivered at the end of September that year.
LOTC said it had posted the $1bn as a cash collateral as part of the deal, which also said that Intel would be compensated for any losses if either party ditched the deal early.
Intel is claiming that that compensation amounted to $1bn in Intel common stock, but Lehman says the deal was for 50.5 million shares, regardless of what price they were at.
"The value of 50,552,943 shares of Intel common stock on Sept. 29, 2008 was about $873 million, not $1 billion," LOTC said.
The bank said that Intel was only entitled to cover its losses "reasonably determined by Intel in good faith".
"Intel’s reasonable losses as a result of terminating the swap agreement were far less than $1 billion," it said.
"Nonetheless, on September 29, 2008, Intel unlawfully seized, and has refused to return any portion of, the $1 billion cash collateral posted by LOTC under the swap agreement, and the nearly $2 million in interest that had accrued thereon as of the Settlement Date."
Lehman is looking for a pile of cash which it claims was "wrongfully seized" by Intel, the amount "to be determined at trial", plus interest, lawyers' fees and, of course, damages.
Intel had not returned a request for comment at the time of publication. ®