New York (HedgeCo.Net) – Shares of Lehman Brothers Holdings Inc. plummeted on Tuesday amidst increasing investor concerns over the bank’s ability to raise capital.  The stock dropped 45 percent to $7.79 in early afternoon trading, marking the lowest level in more than decade for the company that has been pummeled by the credit crisis.

Lehman is expected to announce their third-quarter results on September 18.  They were hoping to avoid another quarter of sharp losses, after having written down over $8.2 billion since last summer. 

Some analysts are expecting Lehman to report losses up to $4 billion this quarter, with plenty more to come.  Lehman still has holds about $65 billion in mortgage-backed assets that are continuing to lose value as the subprime fallout trudges along. 

Hoping to quell a repeat of the Bear Stearns collapse, Legman has unsuccessfully tried to secure a major investor.  Talks with state-run Korea Development Bank ended yesterday due to rumored lack of progress. 

"Their talks had not developed to a serious level. There have been several investors who have been in discussions with Lehman other than us," said one Korean official.

Lehman has been in talks with Kohlberg Kravis Roberts & Co. and the Carlyle Group in regards to buying parts of its real estate and asset-management units. 

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Washington Post – State-controlled Korea Development Bank (KDB) proposed buying 25 percent of Lehman Brothers (LEH.N) for up to $5.3 billion, a newspaper reported, but other Korean banks rumored to be joining a KDB bid consortium denied they were involved.

Daily Chosun Ilbo also reported on Wednesday that top European bank HSBC Holdings (HSBA.L) (0005.HK), several U.S. hedge funds and an unidentified Chinese bank were among other potential buyers of Lehman, the fourth-ranked U.S. investment bank.

KDB had confirmed on Tuesday it was in talks with Lehman over a possible joint investment with other Korean banks, but declined to give details of its negotiations. On Wednesday, it said it was still unsure whether there would be a deal.

"Korea Development Bank has considered M&A deals in foreign investment banks including Lehman Brothers, and asset management companies, as part of its privatization and competitiveness efforts, but nothing has been decided yet," it said in a statement.

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Reuters UK – Lehman Brothers has intensified talks with Korea Development Bank to raise as much as $6 billion (3.3 billion pounds) in a share sale that could be concluded this week, the Sunday Telegraph reported.

South Korea’s KDB KDB.L could buy up to 25 percent of the struggling U.S. investment bank, the paper said, without specifying sources. A spokesman for state-run KDB declined to comment.

A senior source at the Financial Services Commission FSC.L, told Reuters South Korean authorities would not oppose or support any deal until price details were known.

That appeared to mark a shift by the regulator, which previously said KDB should let local private banks take the lead in any international acquisitions, dashing hopes for a direct deal with Lehman.

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