Friday, January 11, 2008

Paragon 90% discounted rights issue leads the demise of the BTL sector

Buy-to-let Paragon resorts to crisis funding

"The troubled buy-to-let specialist raises £287 million through 25-for-one-rights issue as credit squeeze continues. The lender, which has become the first in the UK to resort to a hugely discounted rights issue, is offering shares to investors at a 90% per cent discount to yesterday's closing price of 102p." Yes you read it right 90% PERCENT DISCOUNT. However, shares now are trading at 64p. So, it was Paragon and not BB (yet) the real subject of yesterday's rumors. Good stuff! so we will not be bothered with the boisterous claims of a rosy BTL market by that clown of Nigel Terrington.

Posted by confused76 @ 09:44 AM (813 views)
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7 thoughts on “Paragon 90% discounted rights issue leads the demise of the BTL sector

  • Some anecdotal evidence:

    We’re currently looking for another housemate. Bloke came round yesterday, engineer and project manager, has been told that his btl landlord is going to have to sell his flat or raise the rent to £900 month (for a 1 bed flat !!). Reckon the landlord’ll be selling then, at a loss.

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  • “There is evidence that amateur buy-to-let investors who entered the market to catch rapidly rising property prices are starting to sell up while some professional landlords are reducing the size of their portfolios in the expectation that prices will fall. ”
    http://www.ft.com/cms/s/0/b37ab482-bfd4-11dc-8052-0000779fd2ac,dwp_uuid=e8477cc4-c820-11db-b0dc-000b5df10621.html

    HERE WE GO! HERE WE GO! HERE WE GO!

    BTL down on its knees!

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  • Paragon: a bunch of highly geared dreamers toasting in the sunset.

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  • planning4acrash says:

    Higher interest rates would have assisted the BTL market, because then prices would be stable and it truly would be a long term investment. But then again, low interest rates never had much to do with houses.

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  • Cyncalsoothsayer says:

    They are holding a gun to their shareholders heads; if they do not take up the offer their shares get diluted by 96.2%. So would you stump up your share of another 287 million quid, when you could see that disappear too given the very real possibility of Paragon going bust? But then Paragon will go bust anyway if they don’t get it, so it now looks like the corporate banks are very likely to get their hands on the loan book.

    Who are the majority shareholders? Hedge funds? They can’t get finance either at the moment, so they’re unlikely to be pitching in.

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  • “Paragon said that the proceeds will be used to repay a £280 million loan that falls due on Feburary 27”

    ““The board believes the rights issue will provide Paragon with a platform from which it can pursue further funding, so the company can return to writing significant volumes of profitable business when credit markets reopen,”

    Nothing like taking the p*ss.

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  • Countrywide has now been taken over by Bank of America. I wouldn’t be surprised to see Paragon taken over in a similar fashion during the next month.

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