Paragon Mortgages Emergency Rights Issue

Paragon Mortgages are one of the UK’s best known buy-to-let mortgage lenders who appear to heading towards administration unless their shareholders can bail them out. The company failed to secure new funding at an acceptable rate and was forced to issue an emergency rights issue as reported in the yesterdays Telegraph.

The company issued its first buy-to-let mortgage back in 1995 and is now the third biggest buy-to-let lender and provides one in every ten buy-to-let mortgages.

Paragon highlighted its problems raising funding back in November. Like Northern Rock it relied entirely on the wholesale markets to finance its mortgage lending but was unable to continue raising finance as a result of the US sub-prime loans crisis.

The company is offering shares to investors at a massive 90.2 per cent discount. So if you have a few quid going spare you could do worse than to buy a few. Investing in Paragon should be relatively low risk as I am sure they will secure new sources of finance, at least let’s hope so.