A syndicate of banks is taking a majority stake in troubled UK fund manager New Star in a debt-for-equity swap. New Star said the restructuring will result in £240 mln (EUR 277 mln) of its £260 mln of gross debt being converted into equity.
A syndicate of banks is taking a majority stake in troubled UK fund manager New Star in a debt-for-equity swap. New Star said the restructuring will result in £240 mln (EUR 277 mln) of its £260 mln of gross debt being converted into equity.
New Star is de-listing from the stock exchange and giving the banks control of 75% of the business in return for the debt relief. Blaming the deepening of the credit crisis since September, New Star's board said clients had signalled concerns about its level of debt.
These concerns were exacerbated when New Star temporarily suspended redemptions from its International Property Fund on 25 November.
'In addition, the steep fall in financial markets over recent months has resulted in a significant decline in New Star's assets under management and associated revenues,' the company said. New Star had £13.9 bn of assets under management at end-November, down from £23.1 bn at the end of 2007.
'This will unavoidably reduce New Star's operating profits, and as a consequence, restrict its ability to service its debt in future,' the board said.
