Lehman strategic plan in sight as KDB talks end

By Marie-France Han and Steve Slater

SEOUL/LONDON (Reuters) - Lehman Brothers LEH.N will try to regain investor confidence on Wednesday with a set of "key strategic initiatives" as hopes for a Korean-led rescue crumbled only hours ahead of the planned announcement.

The struggling U.S. investment bank's plan could include the sale of a package of British real estate assets to BlackRock (BLK.N) to raise much-needed capital and survive the credit crisis.

Earlier on Wednesday state-run Korea Development Bank KDB.UL confirmed talks had ended with Lehman Brothers Holdings Inc over a possible investment.

The Wall Street Journal reported on its website that Lehman is in talks with BlackRock over the sale of UK residential real estate assets and could unveil a separate plan to spin off some commercial real estate assets into a new company, citing people familiar with the matter.

Blackstone (BX.N) and Kohlberg Kravis Roberts KKR.UL are each looking to buy parts of Lehman's real estate and asset management units, people familiar with the situation told Reuters on Friday. The real estate unit could be worth $5 billion (2.84 billion pounds), the sources said.

Lehman, a casualty of the U.S. subprime mortgage crisis, has brought forward the release of the initiatives and quarterly results by a week to 1130 GMT (12:30 p.m. BST) on Wednesday after its shares sank as much as 46 percent on Tuesday on growing concern over its ability to raise capital.

Lehman's shares trading in Frankfurt rose 8.2 percent to 7.15 euros by 0920 GMT, on optimism that some measures to help its capital position will be announced.

The fourth-biggest U.S. investment bank has already taken $7 billion in credit-related writedowns and losses since the start of the global credit crisis.