Highland fund to repay redemptions in installments

NEW YORK (Reuters) - Highland Crusader Fund, a $2.3 billion hedge fund that invests in distressed assets and facing an increase in redemption requests, told investors seeking redemptions in a letter on Friday it will repay them in stages in the coming months.

The news was first reported by the Wall Street Journal. The eight-year-old fund, managed by Dallas-based Highland Capital Management, is down nearly 15 percent for the year, according to the Journal. The redemption requests amount to about 20 percent of its equity and many of its assets have dropped in value because of the credit markets, the Journal added.

In the letter, obtained by Reuters, the company said it will pay in installments to avoid selling the often illiquid assets at fire sale prices and that redemptions will be paid in installments over a period of up to nine months.

(Reporting by Phil Wahba; editing by Carol Bishopric)