Valad Property Group, the struggling property fund manager, suffered a 44% plunge in its share price today as the market digested news of significant writedowns, a huge number of redundancies and the restructuring of a large payment to its biggest shareholder, Kevin McCabe’s Scarborough.

An extremely gloomy market update from the Sydney-listed company, which bought the bulk of McCabe’s European property empire in June 2007 for £865m, caused its shares to plummet to 4.7 cents, giving it a market value of just A$75m (£36m). A year ago the shares traded at A$1.21.

Valad still owns McCabe £37m for the purchase of Scarborough, due in September this year. McCabe has submitted a proposal to Valad to restructure these arrangements and reduce the cash commitment payable this year by £30m.

The proposal involves an issue of new shares at a price to be agreed, which would increase McCabe’ stake in Valad to 19.9%. The remainder of the payment would be deferred by three years to September 2012 and will bear interest at a rate to be agreed.

In other moves Valad said it was reducing costs by cutting its headcount by 25% and by losing two executives, Jeff Locke, the CEO of the Asia Pacific region, and Rebecca Thompson, the group head of corporate affairs. In addition, a number of senior executives have agreed 20% reductions to their salaries.

Valad also warned that its equity and mezzanine lending arms, Valad Capital Services and Crownstone, would make ‘signficant’ writedowns and that it had begun talks with its key banks about a restructure of its facilities and covenants.

Simon Wheatley, head of property research at Goldman Sachs JBWere, said: ‘We believe that Valad remains very high risk and will be very challenged to emerge from its current situation’.