Restructure Proposals

    FOR IMMEDIATE RELEASE

                                                                3 December 2008

                      New Star Asset Management Group PLC                      

                                 ("New Star")                                  

                        Proposed Capital Restructuring                         

  * New Star announces a proposed Restructuring that will result in £240
    million of its £260 million of gross debt being converted into equity
   
  * New Star currently has £30 million of cash so that, if the Restructuring
    were effective today, New Star would be left with net cash
   
  * New Star's bank syndicate will own 75% of New Star's enlarged fully diluted
    ordinary share capital and £94 million out of £100 million of new
    convertible redeemable preference shares to be issued by New Star
   
  * New Star intends to de-list as part of the Restructuring
   
New Star announces that it has reached agreement in principle with its bank
syndicate (the "Banks") on the terms of a proposed capital reorganisation of
New Star (the "Restructuring") that will leave it able to concentrate on its
investment performance and client service as an unlisted company.

As the credit crisis has deepened since September, a number of New Star's
clients have signalled their concerns about its level of debt in the face of a
possibly prolonged economic downturn. These concerns have been exacerbated by
the recent, but unrelated, temporary suspension of dealing in its International
Property Fund. The Board believes that the reporting requirements and public
scrutiny that are part of being a listed company have served to magnify these
concerns.

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. Assets under management were £13.9 billion at 30 November
2008. This will unavoidably reduce New Star's operating profits, and as a
consequence, restrict its ability to service its debt in future.

The Board has therefore concluded that New Star's current capital structure,
and in particular its level of debt, is no longer appropriate. The proposed new
capital structure is intended to eliminate any negative impact of New Star's
debt on its business, whilst retaining potential value for equity holders. This
will enable New Star to focus on restructuring the business, improving its
investment performance and maintaining its client service.

Under the terms of the Restructuring, New Star will put proposals to
shareholders to de-list. On completion of the Restructuring the Banks will
convert £240 million of the £260 million owed to them, together with certain
other amounts owed to them, into £94 million of convertible redeemable
preference shares (the "Preference Shares") and such number of new ordinary
shares as together will give the Banks 75% of New Star's fully diluted enlarged
ordinary share capital, calculated without taking into account the conversion
of the Preference Shares. An additional £6 million of Preference Shares will be
available for employee incentivisation.

The Preference Shares will entitle the holders to an annual dividend of 10 per
cent. above LIBOR which will start accruing 6 months following issue. This
dividend will not be payable until 30 June 2013. The Preference Shares,
together with the accrued dividend entitlement, must be redeemed on 30 June
2013 (or, if earlier, out of the net proceeds of any disposal) save that on 30
June 2013 New Star may elect to convert the outstanding Preference Shares into
ordinary shares representing, together with the ordinary shares held by the
Banks, 95% (or such lower percentage as may apply taking into account earlier
redemptions of Preference Shares) of the fully diluted enlarged share capital
of New Star following conversion (excluding any shares in issue pursuant to the
exercise of the warrants described below). Whilst the Preference Shares are in
issue, no dividends will be paid on the ordinary shares without all accrued
dividends on the Preference Shares having first been paid and without the
consent of the holders of the Preference Shares.

The balance of £20 million of the current gross debt will remain in place and
be repayable in June 2013. This compares with New Star's cash at 30 November of
£30 million.

In order to attract and retain key employees following the Restructuring, New
Star has agreed with the Banks a senior management incentive scheme comprising
warrants over a new class of ordinary shares representing 5% of the fully
diluted ordinary share capital. These warrants will vest over the next 2 years
subject to profit targets. In addition, minimal cost options over a total of £6
million of Preference Shares will be granted to certain employees.

The Restructuring is conditional, inter alia, on signature of documentation
satisfactory to New Star and the Banks, on the approval of New Star's
shareholders (including to the effect that on completion of the Restructuring
none of the Banks will be required to make a general offer for New Star under
Rule 9 of the Takeover Code) and on regulatory approval. New Star expects to
post the relevant documents to shareholders in the next few weeks and to
complete the Restructuring early in the New Year.

Further details of the Restructuring will be provided in due course.

Commenting today, John Duffield, chairman of New Star, said:

"The Board recognised the concerns of our clients regarding the level of our
debt during these difficult times. We have therefore taken this radical step to
address these concerns completely and with one stroke.

We are now free to focus all our attention on improving our investment
performance. Our existing share-based bonus scheme will be replaced by a new
scheme to ensure that our key people are locked in.

The cost of this restructuring is regrettably a substantial dilution for
ordinary shareholders, including me. However in current market conditions, we
have to recognise that there is no other option to ensure the stability of the
business."

Enquiries:

Citigate Dewe Rogerson

Anthony Carlisle (office) 020 7638 9571 (mobile) 07973 611888

Note for editors:

The banks in New Star's syndicate are HBOS, Lloyds, RBS, HSBC and National
Australia Bank.



END