Lehman Brothers in freefall as hopes fade for new capital

NEW YORK, September 9, 2008 (AFP) – Shares of Lehman Brothers went into a freefall Tuesday as hopes faded for an injection of fresh capital for the ailing Wall Street investment bank, analysts said.

Lehman, one of Wall Street’s most prominent investment firms, saw its shares tumble 44.95 percent to end at 7.79. The shares have plunged 88 percent since February.

Selling pressure accelerated Tuesday after the Wall Street Journal reported the Korea Development Bank, the state-run South Korean firm, had put talks on hold with the US firm.

KDB had reportedly been eyeing a 25 percent stake for some four billion dollars.

Standard & Poor’s said it placed Lehman credit rating on watch with a potential for a downgrade — which could further complicate efforts to raise capital.

The decision “stems from heightened uncertainty about Lehman’s ability to raise additional capital, based on the precipitous decline in its share price in recent days,” said S&P analyst Scott Sprinzen.

S&P said it believes “that the company incurred a substantial net loss in the third quarter because of persisting difficult conditions in the investment-banking trading markets and write-downs from deteriorat