GLG Partners, one of London’s largest hedge funds, released a letter to investors, providing the latest updates in its efforts to withdraw money from Lehman Brothers, according to The New York Times.
The hedge fund released the letter, trying to alleviate investor concerns about their exposure to the fallen investment bank. The hedge fund said that its direct exposure is $95 million, or less than one percent of assets under management—but its dependent that the funds’ money was kept in a separate account.
Read the letter:
Dear GLG Fund Investor,
We wanted to update you about the impact to us arising from the administration proceedings of Lehman Brothers International (Europe) (”LBIE”), and the insolvency proceedings of other entities in the Lehman Brothers group. In total, we currently estimate that the combined direct exposure of the GLG Funds to be approximately $95 million, or less than 1% of GLG’s net AUM. We have detailed each Fund’s potential exposure stemming from LBIE’s administration in letters to the investors in those Funds.
Our assessment of the LBIE 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. 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.
Lastly, we are evaluating with the directors of our Funds how to address Fund NAV’s and the October 1, 2008 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. 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 all of which will be designed to treat all Fund shareholders equally, minimize disruption to the investment process, enable the Funds to continue to invest and permit redemption of shares in the funds.
If you have any questions, please feel free to contact your representative with any questions.
Best Regards,
GLG Partners LP