New Star Asset Management has been forced to accept a sharp increase in interest charges to renegotiate the terms of its £236m of debt as it grapples with the severity of the stock market downturn.

The fund manager, which was founded by John Duffield in 2000 and at its peak in May 2007 was valued at more than £1.5bn, also said it was planning to restructure and axe up to 60 jobs, resulting in a cut in expenses of about £20m next year.