Lehman to raise $3 billion capital

Lehman Brothers Holdings Inc, an investment bank beset by rumors of not having enough funding, said it plans to raise $3 billion of capital.

Lehman's shares fell nearly 5 percent in aftermarket trading to $35.85, after the planned offering of convertible preferred shares was announced.

Lehman said in a statement that it has received significant interest from several key institutional investors in the deal.

Lehman has been one of the few major U.S. investment banks to avoid raising additional capital. The other one is Goldman Sachs Group Inc. But Merrill Lynch & Co Inc and Morgan Stanley have each raised billions of dollars of capital in recent months.

Lehman, the fourth-largest U.S. investment bank, said it can sell up to another $450 million of additional convertible preferreds to meet extra demand.

Rumors have swirled around Lehman since the demise of Bear Stearns Cos Inc but Lehman has said in recent weeks that it has some $200 billion of assets it could sell or borrow against, and that its ability to borrow directly from the Federal Reserve should dispel questions about its solidity.