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GLG “pressing administrators” to clarify exposure to Lehman Brothers International

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GLG Partners has written to investors saying that it estimates the combined direct exposure of its funds to Lehman Brothers International (Europe)

GLG Partners has written to investors saying that it estimates the combined direct exposure of its funds to Lehman Brothers International (Europe) and other parts of the bankrupt investment banking group to be around USD95m, less than 1 per cent of GLG’s net assets under administration.

However, it says it will not be able to confirm its assumptions and estimates relating to the unwinding of its business relationships with Lehman group companies until it receives more information from the administrators of Lehman Brothers International (Europe), which it is actively seeking.

“Our assessment of the Lehman Brothers International (Europe) exposure is based upon a number of assumptions (including that amounts LBIE was required to treat for each fund as client money and not use in the course of its business were and are, in fact, so held and will be released upon repayment by each fund of all its debt to LBIE) and in accordance with legal and professional advice obtained,” the firm says. “That said, until we are able to fully reconcile our information and assumptions with the administrators of LBIE, our estimates could change.”

“Since at least the beginning of 2008, in addition to steps taken to significantly reduce our fund assets held with LBIE, we negotiated to more fully protect any remaining assets and transactions through a series of bespoke arrangements.

“We have good reason to believe that these arrangements were adhered to by LBIE but until we meet with the administrators some uncertainty will remain. We have been pressing to begin a constructive dialogue with the administrators soon which will enable us to refine our assessment further.”

GLG says it has also been evaluating with the directors of its funds how to address fund net asset values and the October 1 dealing day. “At this point, we believe that all of our funds will be able to publish a dealing NAV as at October 1 by writing down the estimated exposure to LBIE to fair value,” the firm says.

“We believe NAVs will be published in the normal periods of time, except in a few cases where there may be a short delay while our estimates are further refined and valued. In the event that one or more funds are ultimately unable to publish a timely NAV, the directors of these funds will consider a number of alternatives designed to treat all fund shareholders equally, minimise disruption to the investment process, enable the funds to continue to invest and permit redemption of shares in the funds.”

Established in 1995, GLG aims to focus on preserving clients’ capital and achieving consistent, superior absolute returns with low volatility and low correlation to equity and fixed income markets. At the end of June the firm managed assets exceeding USD23bn.

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