Thursday, Nov 22, 2007
Getting pwned
This is Money: Paragon sparks fear of meltfown in buy-to-let
Paragon shares have crashed by about 90% this year, making it worth just £90m. It needs to raise £280m by Feb to repay its obligations to the banks.
In a matter of months, buy-to-let has gone from a great source of income to a potential disaster area.
Posted by little professor @ 09:02 AM (652 views) Add Comment
6 Comments
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1. sovietuk said...
"More likely is that Paragon is forced to go back to its banks and renegotiate the terms of its £280m credit facility, which provides working capital such as wages. Analysts believe the banks will charge interest at 5% above Libor - or around 11.5%."
2. dohousescrashinthewoods said...
"5% above Libor - or around 11.5%." - about the same as sub-prime borrowers are being charged.
"Such as wages" is worrying. If they go down, does that mean staff won't get paid?
3. the reaper said...
noone will lend them now I'd have thought.If the big boys are struggling to raise money,Paragon will be stuffed
4. drewster said...
@dohousescrashinthewoods - When companies collapse, staff often don't get paid. It's unfortunate but fairly common. You may remember a company called The Accident Group which collapsed in 2003. Staff were informed by a text message: "Urgent. Unfortunately salaries not paid. Please do not contact office. Full details to follow later today."
5. Johng said...
"In a matter of months, buy-to-let has gone from a great source of income to a potential disaster area."
Nonsense. All the 'Paragon news' means is potential new landlords probably won't be able to enter the market. It has SFA impact on existing players.
6. S2rjul07 said...
@Johng
The existing players may find themselves in trouble when they come to remortgage at the end of their teaser rates and find that not only have rates gone up across the board but they are up most substantially for b2l.