FWP 1 dfwp.htm FREE WRITING PROSPECTUS Free Writing Prospectus

Term sheet no. 1 to

Prospectus supplement dated May 30, 2006

Prospectus dated May 30, 2006

Registration Statement no. 333-134553

Dated October 23, 2007

Rule 433

 

 

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Synthetic Convertible Notes

 

    Indicative Terms and Conditions as of October 23, 2007

 

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Lehman Brothers Holdings Inc. has filed a registration statement (including a prospectus) with the U.S. Securities and
Exchange Commission (SEC) for this offering. Before you invest, you should read the prospectus dated May 30, 2006,
the prospectus supplement dated May 30, 2006, the synthetic convertible prospectus supplement dated October 5, 2006
and other documents Lehman Brothers Holdings Inc. has filed with the SEC for more complete information about
Lehman Brothers Holdings Inc. and this offering. We urge you to consult your investment, legal, tax, accounting and
other advisers before you invest in this offering. You may get these documents and other documents Lehman Brothers
Holdings Inc. has filed for free by searching the SEC online database (EDGAR®) at www.sec.gov, with “Lehman
Brothers Holdings Inc.” as a search term. Alternatively, Lehman Brothers Inc. or any other dealer participating in the
offering will arrange to send you the prospectus, prospectus supplements and final pricing supplement (when
completed) if you request it by calling your Lehman Brothers sales representative, such other dealer or 1-888-603-5847.

Contact Information:    

 

Bill Gavaris    

Lehman Brothers Inc.    

745 7th Avenue    

New York, NY 10019    

 

TEL 212-526-5614    

gavaris@lehman.com    

   

 

General Issue Terms

   
   

 

Issuer:

  

 

Lehman Brothers Holdings Inc. (A+/A1/AA-)*

   

 

Issue Type:

  

 

Registered medium term notes (equity-linked)

   

 

Securities Offered:

  

 

Synthetic Convertible Notes (the “Notes”) with payment at maturity linked to the performance of the Reference Equity

   

 

Currency:

  

 

USD

   

 

Maturity:

  

 

October 30, 2012 (5 years after the Settlement Date)

   

 

Principal Amount:

  

 

$1,000 per Note, and in the aggregate, $3,650,000

   

 

Purchased Amount:

  

 

$1,120 per Note, and in the aggregate, $4,088,000; i.e. note buyer is purchasing 3,650 Notes at a premium of 112.00%

   

 

Denominations:

  

 

$1,000 and integral multiples thereof

   

 

Issue Price:

  

 

112% ($1,120 per Note)

    Interest    
   

 

Interest Rate:

 

  

 

2.40%, calculated on a 30/360 day basis

 

    Interest Payment Dates:

 

  

Semi-annually, on the 30th calendar day of each April and October, beginning on April 30, 2008.

 

    Interest Record Date:   15 calendar days prior to each Interest Payment Date
    Calculation of Payment at Maturity
   

 

Reference Equity:

 

  

 

The common stock of Icahn Enterprises LP (“IEP”)

 

    Conversion Premium:  

23.56%

 

    Threshold Value:  

$159.8001 (123.56% of the Initial Execution Price)

 

    Initial Execution Price:     $129.33 per share of the Reference Equity
   

 

Conversion Ratio:

  

 

6.2578 ($1,000 divided by the Threshold Value)

   

 

Payment at Maturity:

  

 

For each Note, the greater of the following amounts, which may be paid in cash or settled in shares of the Reference Equity:

 

(i)     $1,000, plus accrued but unpaid interest; and

 

(ii)    The Alternative Redemption Amount, plus accrued but unpaid interest

     
   

 

* Lehman Brothers Holdings Inc. is rated A+ by Standard & Poor’s, A1 by Moody’s and AA- by Fitch. A credit
rating reflects the creditworthiness of Lehman Brothers Holdings Inc. and is not a recommendation to buy, sell or
hold securities, and it may be subject to revision or withdrawal at any time by the assigning rating organization.
Each rating should be evaluated independently of any other rating. The creditworthiness of the issuer does not affect
or enhance the likely performance of the investment other than the ability of the issuer to meet its obligations.

 

     

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    Alternative Redemption Amount:   The Alternative Redemption Amount per $1,000 Note will equal $1,000, multiplied by a ratio determined by dividing (a) the Settlement Value on the Valuation Date by (b) the Threshold Value.

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Contact Information:    

 

    

 

Redemption Details

    
   

 

Redemption Option:

  

 

On or after the Earliest Redemption Date, Issuer may redeem, on not less than 30 days’ (or such other period specified in the relevant pricing supplement) prior written notice, each $1,000 Note at a price equal to the amount that would be payable to the Buyer at maturity, but with the Settlement Value based on the closing price of the Reference Equity, on the date notice of redemption is given, plus any accrued but unpaid interest.

Bill Gavaris    

Lehman Brothers Inc.    

745 7th Avenue    

New York, NY 10019    

 

TEL 212-526-5614    

gavaris@lehman.com    

    

 

Earliest Redemption Date:

  

 

3 years after Trade Date

   

 

Repurchase Rights

    
   

 

Repurchase Option:

  

 

On any business day during the Repurchase Period, the Buyer has the right to irrevocably tender each $1,000 Note in exchange for a number of shares of the Reference Equity equal to the Conversion Ratio (plus cash in lieu of fractional shares, calculated using the Settlement Value on the Valuation Date, which will be the third Business Day prior to the Repurchase Date). To exercise the Repurchase Option, the Buyer must complete a “Notice of Exchange” and deliver it to the Issuer. If the Buyer exercises its Repurchase Option, the Issuer will deliver to the Buyer shares of the Reference Equity equal to the Conversion Ratio (which may have a market value greater or less than $1,000 per $1,000 Note), plus cash in lieu of fractional shares, plus any accrued but unpaid interest, on the Repurchase Date.

 

   

 

Repurchase Period:

  

Trade Date to and including the eighth business day prior to the Stated Maturity Date

 

    Repurchase Notice Period:   8 business days
   

 

Repurchase Date:

  

 

The eighth business day following the business day when the “Notice of Exchange” is delivered to the Issuer.

 

   

 

Settlement Details

    
   

 

Settlement Type:

  

 

Cash or physical on the Stated Maturity Date at the option of the Issuer

 

Mandatory physical on any Repurchase Date,

 

Cash if the Issuer exercises the Redemption Option

   

 

Settlement Value:

  

 

Closing level of the Reference Equity on the Valuation Date multiplied by the Multiplier

 

     

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    Base Dividend:  

 

$0.15, which is the most recent quarterly dividend paid by the Reference Equity

 

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     Multiplier:   The initial Multiplier is 1.00. The Multiplier is subject to adjustment under various circumstances, including if the Reference Equity pays a dividend different from the Base Dividend. Please refer to the prospectus supplement for further details.
   

 

Dates

    
    Trade Date:  

 

October 23, 2007

 

Contact Information:         Settlement Date/Issue Date:  

October 30, 2007 (5 business days after the Trade Date)

 

    Stated Maturity Date:   October 30, 2012 (5 years after the Settlement Date)

Bill Gavaris    

Lehman Brothers Inc.    

745 7th Avenue    

New York, NY 10019    

 

TEL 212-526-5614    

gavaris@lehman.com    

    

 

Valuation Date:

  

 

The third business day prior to the Stated Maturity Date or, in the case of the exercise of the Issuer’s Redemption Option, the date that notice of redemption is given or, in the case of the exercise of the Buyer’s Repurchase Option, the date that is a number of business days equal to the Determination Period specified in the relevant pricing supplement before the Repurchase Date, in each case subject to postponement if a market disruption event occurs.

   

 

Determination Period:

  

 

Three business days

 

    Other Information    
   

 

Listing:

  

 

The Notes will not be listed

    Quotation Exchange:  

For the Notes: None

 

For the Reference Equity: New York Stock Exchange

   

 

TRACE Eligibility:

  

 

Yes

   

 

Business Days:

  

 

New York

   

 

Calculation Agent:

  

 

Lehman Brothers Inc.

 

    Trustee:  

Citibank N.A.

 

    Adjustments:   Detailed provisions specifying the adjustments to be made to the terms and conditions of the Notes upon the occurrence of a market disruption event or an adjustment event in relation to the Reference Equity shall be contained in the prospectus supplement (including any applicable pricing supplement) relating to the Notes. All purchases of Notes are deemed to be subject to the terms thereof.
   

 

CUSIP Number:

  

 

5249083L2

 

    ISIN Number:  

US5249083L27

 

    Clearing:  

DTC

 

    ADP Description:  

LBH “IEP” Syn Convert

Synthetic Convertible on IEP

123.56%-Conv Price Dec12-MAT