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Rights issue pays off for Paragon

Paragon has completed the successful take-up of its £287m rights issue.

The buy-to-let lender faced speculation that it could be taken over after its share price fell by 46 per cent in November when it warned that it would have to make an emergency rights issue due to the liquidity crunch.

Paragon has now confirmed at it has 100 per cent take-up of the rights issue. The company’s share price is still down by 88 per cent at111.5p from 999p a year ago.

Home Funding chief exec-utive Tony Ward says: “I do not think it is a sale targetany more.

“Paragon is sitting on around £140m cash so thereis a lot of embedded value inthe business that is not reflec-ted in its share price.”

Paragon is now in a position to repay its corporate debt following the rights issue but it looks set to stop lending on February 28 as it has been unable to secure commercially acceptable terms for the extension of its term.

The company’s warehouse will now convert to a term-out facility but the lender’s assets, which are already funded at that date, will remain funded until they mature.

Ward says: “Paragon will not be lending for the foreseeable future but I think it will be fine in the long run. We are assuming at the moment that the market is definitely shut this year.”

Robert Sterling managing director Kevin Duffy says: “I think that Paragon will find itself through this. There is a lot of value in that business.”

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