UPDATE: 9.55GMT - NSAM about to be suspended due to “excess volatility,” we understand.
Oh to be a fly on the wall at the UK Listing Authority on Monday morning after it rebuffed Death New Star Asset Management’s request to have trading in its stock suspended.
The reasons for the UKLA’s decision remain unclear but the damage to New Star’s share price is anything but - the stock lost almost lost three quarters of its value.
Mid-morning the shares were trading at just 4.1p, reducing the fund manager’s market value to £11m. That compares with net debt of £240m at the end of June.
Analysts reckon a massively dillutive capital raising or some sort of debt-for-equity swap is now inevitable. Sarah Spikes of Arden Partners said:
The statement says the company suffers from continuing redemptions. In essence the company is suffering from a crisis of confidence which, we suspect, can only be solved by dilution of equity and consequently we retain our Sell recommendation.
More immediately, action by the authorities in forcing a continuation of trade would appear to be tantamount to causing a market run.
Stewards enquiry please!
Related Links:
New Star Asset Management, Suspension of Shares - FSA
FSA Listing rule 514
Information required for a share suspension - FSA
