New Star Asset Management, the beleaguered UK fund manager, has agreed a deal with its bankers that will see its current shareholders all but wiped out and the company taken off the stock market. Under the deal, the lenders, including HBOS, Lloyds TSB, HSBC and RBS, will cancel £240m of New Star’s £260m debt in return for a 75% stake, leaving existing shareholders with just a quarter of the business. New Star’s high-profile founder and chairman John Duffield will stay with the company, while current fund managers will be encouraged to stay with a 5% issue of ordinary shares at their diluted price. Duffield expressed regret at the “substantial dilution” for ordinary shareholders but said there was no other way to ensure stability of the business. New Star will also issue £100m of new preference shares, with the banks taking £94m and an extra £6m being made available as an incentive for certain employees. If the banks exercise this option, they will end up with a total of 95% of the company.

This entry was posted by Gwen Robinson on Thursday, December 4th, 2008 at 5:48 and is filed under Capital markets, People. Tagged with new star. Edit this entry.