News - Offshore investment
Groups give go-ahead for £4.4m retention package for key employees following acquisition of beleagured fund house
Henderson has agreed a £4.4m remuneration package with New Star to lock in between 15 and 20 key members of staff at the proposed enlarged entity.
New Star's current chief executive Howard Covington has revealed the two groups have jointly compiled a list of crucial staff earmarked for retention, with the candidates set to be informed over the next few weeks.
Individuals included in the plan have not been disclosed, but key members of the fund management and sales teams, including Tim Steer, Richard Pease and Guy de Blonay, are rumoured to be in the frame.
Subject to the successful restructure of New Star by its banking syndicate, Henderson will swap 0.4 new Henderson shares plus up to 48.4p in cash for each New Star preference share.
Under the proposed New Star restructure, unveiled last month, £6m out of the total £100m preference shares were earmarked to "attract and retain" key employees.
However, New Star's preference shares are set to be purchased for a total of £73.4m by Henderson.
Ordinary shareholders, including many staff still at New Star, will only receive £5.3m, but the most valued members of the company will be included in the preference share deal - if they join a new lock-in scheme at Henderson.
Covington says the lock-in arrangements will go a long way to shore up investor confidence in New Star's funds.
"Redemptions (in our funds) have considerably slowed in January compared to what we saw in Q4," he says.
In a letter to advisers last week, founder John Duffield said Henderson is fully committed to supporting New Star's desire to restore fund performance to the levels achieved prior to 2007.
"At this stage we cannot confirm the arrangements for individual funds or fund managers, investors may take comfort from continuity in some key areas and from Henderson's strong investment capabilities, which we believe are complementary to New Star's," he said.
"I deeply regret the uncertainty that New Star's corporate situation has caused investors, but I am confident the Henderson proposal is the best long-term solution to resolve this."
Hendersons' offer is conditional upon completion of New Star's restructuring to significantly reduce its debt obligations - as well as acceptances by 90% or more of New Star ordinary shareholders, the approval of Henderson shareholders and the green light from relevant regulators.
Duffield, a number of New Star managers and other shareholders in the firm have made irrevocable undertakings to vote in favour of the deal, representing up to 24.95% of New Star's ordinary shares.
Franklin Templeton has issued a non-binding letter of intent for its 10.96% stake.
Duffield, Covington and New Star non-executive directors including former FSA chief executive John Tiner, intend to leave the firm once the Henderson offer is declared wholly unconditional.
Other directors of New Star, including Pease, intend to remain with the enlarged Henderson Group following the completion of the deal, "at least for a transitional period".
New Star expects the transfer of ownership to complete by early April and pledged to keep advisers fully informed throughout the process.
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