Lehman Brothers is hitting up the capital markets for cash.

The investment bank said it plans to raise $3 billion through a convertible preferred stock offering. It did not include details of the terms or who the investors will be. If there is sufficient demand for the offering, it could raise an additional $450 million by issuing more shares. Reuters reports that the shares are expected to pay a dividend of between 7 and 7.5 percent and a conversion premium of 30 to 35 percent.

In a statement, Lehman chief financial officer Erin Callan said that the bank expects the challenging market environment to continue for the rest of the year and the time was right to raise more money. "We also felt this was the right time as there was a window of opportunity in the market, as we have received significant interest from several key institutional investors who have been strong supporters of the firm over time," she said.

Lehman has tried desperately to quell the rumor mill ever since Bear Stearns was rescued from bankruptcy by J.P. Morgan Chase and the Federal Reserve two weeks ago. It sought to reassure investors that its liquidity position was stable, but that didn't stop some detractors, including Condé Nast Portfolio's Jesse Eisinger, from throwing cold water on its balance sheet.

In fact, Callan herself essentially admitted that this stock offering is little more than an attempt to boost confidence and try to solve the perception problem that Lehman could suffer the same fate as Bear Stearns. Less than two weeks ago, she told investors that Lehman had nearly $100 billion in cash and cash equivalents in addition to access to the Federal Reserve loans.

"We still maintain that we don't need capital, but we've realized that perception is the dominant issue in today's markets,'' she told Bloomberg in an interview. "This is an endorsement of our balance sheet by investors.''

To be sure, it is a good sign that Lehman does have the investor interest for a $3 billion capital infusion. Other Wall Street firms, including Merrill Lynch and Citigroup, have issued similar offerings in recent months to sovereign wealth funds and other large institutional investors.

Shares of Lehman, which have lost nearly a third of their value so far this year, fell another 3 percent in after-hours trading.