Lehman Brothers International (Europe) (in administration) - webcast to employees (transcript)

Good Morning as the events of the last few weeks have progressed, we have been incredibly impressed of the professionalism and most importantly the patience you have shown on one of the time of real uncertainty for everybody. Thank you for bearing with us we know that many of you are feeling unsettled and you certainly have many questions about the administrations and how the progress here today might affect you. Mike and I are here to give this the first and a regular series of updates which we hope will address some of the issues which are foremost in you minds. This is as you will have seen reported one of the most complex insolvency cases ever seen in the financial services industry. PwC Partners has now been appointed administrators from additional six companies bringing a total number of appointments to ten. We realise that the answers might not have been as forth coming as you might like but rest assured we are totally committed to passing on all information we can to you as soon as we are able to. I'll hand over to Mike who will give you an overview of the latest developments on the Namura deal and how we are progressing.

Thanks Tony. Firstly, I am delighted to inform you that the deal with Nomura has become unconditional, this means that Nomura has waved the three key conditions that they want satisfied before we could go ahead to finalise the sale of the equities and investment banking divisions. This has been a real team effort on the part of Nomura, my PwC colleagues but mostly you, the Lehman staff and management. Thank you again.

We are working through the final details of the transitional services agreement. That's an agreement that really dictates how PwC and Nomura will work to separate and transition the businesses. This will take some time. The agreement for example, provides for us to be working alongside each other for several years. I don't want to say more than that at this point, as the agreement is commercially sensitive. But I'm pleased to tell you that final completion has no further barriers, so please watch this space. It should be a matter of week or so away. There will certainly be a number of staff who will transfer direct to Nomura on completion. These staff include all of the front office and a large number of staff from the corporate division. We are still in the process of confirming the numbers with Nomura. Most staff in the UK will be transferred in the what's called the TUPE regulations which ensure the integrity of employees' terms and conditions under the transfer. Staff in other countries affected by the deal will be consulted in line with local employment laws and practices which of course must be adhered to. You will be communicating with directly for both PwC and Nomura are seeking to ensure that employee rights are protected. There are many staff who will remain employees of Lehman Brothers and will be retained under the direction of Me and my fellow administrators after the deal. If you are in that category, please rest assured you are vital part of our plans to wind down the financial assets of this firm. As you know, as we have said before, our main job as administrators is to maximise the value of the assets in the companies for the benefit of the creditors. This will take many months, many years and requires your knowledge and expertise and your commitment. We are still working through our exact requirements. But we intend to incentives the right people to stay. We will of course talk to you directly about this as our plans crystallise.

Looking ahead with the deal with Nomura means there will be certain number of Nomura staff located here at Bank Street even before completion. After completion, Nomura and the transferred staff will take over some space here obviously to run the IVD and equities businesses, whilst we continue to run the administration. We can confirm that we will all remain here at Bank Street for the time being and definitely beyond the end of this year. Last week for example we paid the rent on the building in accordance with the lease terms. We will do everything we can to help this move, co-location of our teams with Nomura. Co-operation is key and has been excemplinary so far. We will continue to work together as part of the ongoing transitional services and infrastructure.

We have made other progress in other areas too. Everyone affected by the administration has questions from clients, from counterparties, from hedge funds, from regulators, from the press and from contractors. The tracking resolution from all these questions remains a major priority for us. It is really important that we get a robust process to capture and resolve the queries and ensure that the process has appropriate governance and audit trails around it. We built a database which is dealing with a great many questions wee receive on a daily basis and these questions are being addressed. One of the most pressing questions which has arisen in the last few days, concerns October payroll. As we have committed previously as we now confirm again October salaries will be paid to all those employees who continue to work throughout the month of October and they will be paid on or before the 31 October. I am now going to hand back to Tony for further updates on what we have been doing.

Thanks Mike. Firstly we have been working closely with all parties in the US, to make sure we are coordinated and tied in with the developments there. In particular we are in discussion with Alvarez which is the firm who have been hired to workout the Lehman's holding incorporated business and the both the dealer business over there that's been transferred to Barclays. We are working with their lawyers and we are trying to resolve the issues that affect them over here and the issues that affected us over there. We are also beginning to make arrangements for the creditors committee meeting which will be holding early November. That will be the first opportunity the creditors have got to talk to us and hear from us the developments in the case and we will be able to give them hopefully some idea of the financial position of the companies we have been appointed to.

With regard to other parts of the Lehman empire fro which we are not responsible, of course we have to deal with Lehman Brothers asset managements where we are continuing our efforts to sell that business either as part of the transaction in America or separately, but at the same time to manage it in the future so that there is a solvent business there. With regard to Capstone and some of the real estate investments and non-performing loans that exists in various parts of the group structure particularly under the UK real estate, we continue to investigate those companies and to explore the future for them and develop information memorandum and so on that we can put out to the market with the hope of being able to sell some of those businesses, so the employees that relate to those businesses of course we continue to need in our efforts to wind down the affairs of the group.

We are very conscious there are some employees here who are on dual contract. There are employees here who only work on matter related to the US. We are in the early stages of discussions with the Ovaries team in order to develop a plan for retaining those people and recharging the cost of them to the estate in the US. So there is  a lot of work going behind the scenes to try and resolve the issues which are obviously effecting the employees here personally. We will try and get a bit of clarity around that.

We would also like to take this opportunity to thank you again for the tremendous effort that you put into working with us. The professional approach that you have used in your daily approach to the tasks here and the patience that you have shown in the tolerating the situation that you find yourself in.

We are looking forward to carrying on this medium with you and providing further insight to what is going on. Updating you as much as we can on the matters that will effect you and in particular we are very conscious that with regards to staff working overseas, those individuals are finding themselves in very unusual situation because local labour laws are very different from here. They are very remote to what is going here.

So in response to lots of questions that are coming from staff located out there we are going to organise, what we call a town hall, a telephone town hall in the coming days probably with the under the directions of Ian Jameson where we will give the staff out there the opportunity to Q&A; members of the administration team with regards to how affairs here in the UK are going to affect you in your different locations.

So, I will now bring message to an end by simply thanking you on behalf of the administrators here by your tolerance, forbearance, your patience and your professionalism in continuing to help us with our tasks.