New Star in fresh debt talks

By James Molony

LONDON (Reuters) - Shares in New Star Asset Management, a fund manager plagued by money outflows, crashed on Monday as it said it had entered fresh debt talks with banks.

The company has been hit by outflows as clients, spooked by the stumbling economy, withdraw their cash. An analyst told Reuters he believed New Star would most likely be negotiating a debt for equity swap with the banks.

"New Star announces that it is in advanced and constructive discussions with its bank syndicate," the group said.

"Pending the outcome of these discussions, New Star has requested a temporary suspension of its ordinary shares."

But the UK Listing Authority rejected New Star's request to suspend trading in its shares and the stock plummeted 67.79 percent to at 4.5 pence at 09:53 a.m. It closed at 14 pence last week, having lost 92 percent already so far this year.

"The only thing I can think is that they will be discussing a debt for equity swap," an analyst covering New Star said, requesting anonymity.

New Star's 236 million pound debt pile has been a stumbling block in its discussions with potential buyers, reported to include major industry players such as Henderson (HGI.L) and Aberdeen Asset Management (ADN.L).

New Star said on Nov 14 it had accepted tougher terms on its debt after talks with its banks.  Continued...