Paragon Group Of Companies PLC
18 January 2008
Under embargo until Stock Exchange announcement: 7am, Friday 18 January 2008
THE PARAGON GROUP OF COMPANIES PLC
('The Company')
Interim Management Statement
----------------------------
Introduction
On 11 January 2008, the Company announced a proposed fully underwritten £287
million rights issue (the 'Rights Issue Announcement') to enable repayment of
the Group's corporate loan facility, which falls due on 27 February 2008 (the
'Corporate Facility'). The Rights Issue Announcement includes a description of
the background to and reasons for the rights issue and the Group's current
trading and prospects. Investors are asked to read that announcement for a more
comprehensive explanation of material events and transactions that have taken
place since 30 September 2007 (the end of the Group's last financial year),
their impact on the financial position of the Group and a general description of
the financial position and performance of the Group.
No information contained in this announcement conflicts with or is in addition
to the information contained in the Rights Issue Announcement. This announcement
should be read in conjunction with the Rights Issue Announcement.
Interim Management Statement
Since 30 September 2007, the Group's business has continued to operate
profitably in line with management's expectations. Funding available under the
Group's warehouse loan facility (the 'Warehouse Facility') has enabled the Group
to continue to lend during this period and as at 30 November 2007, the Group's
portfolio of assets outstanding amounted in total to £11.3 billion.
Funding under the Warehouse Facility for new advances is, however, expected to
cease to be available on 28 February 2008 although in accordance with its terms,
assets already funded at that date will remain funded to maturity. It has not
been possible to agree commercially acceptable terms for any extension of the
availability period for new advances under the Warehouse Facility.
In order to be in a position to repay the Corporate Facility on its due date and
as a result remove the risk of default under that facility, the Company is
proposing a fully underwritten rights issue to raise an amount before expenses
of £287 million. The proceeds of the rights issue together with the existing
cash resources of the Company will ensure the repayment of the Corporate
Facility thereby protecting the shareholder value in the Group.
If the rights issue proceeds, the Board will continue to seek appropriate
additional working capital and warehouse financing to enable the Group to
originate further new business in the future and to act as an originator of
assets for third parties through the Group's network of brokers and other
intermediaries, thus generating commission income rather than net interest
margin as at present.
This will be in addition to any origination permitted within the existing
funding arrangements, comprising a small volume of mortgage lending until 28
February 2008 as Paragon completes on outstanding mortgage offers. Beyond this
date, new mortgage business is likely to be limited to further advances on
existing mortgages financed by available redemption funds in the Group's special
purpose vehicle subsidiaries. Some new consumer finance lending will be possible
using substitution capacity in existing financing vehicles. Furthermore,
originations under any new warehouse facilities which may be arranged are likely
to be at significantly lower volumes than recent levels.
Taking account of the rights issue proceeds and the terms of the Warehouse
Facility, all of the Group's existing assets are fully funded to maturity.
However, ultimately, the Group's ability to grow in the future will be dictated
by its ability to regain access to the asset backed securitisation markets on
commercially acceptable terms.
For further information, please contact:
Nigel Terrington 0121 712 2024
Chief Executive
Nicholas Keen 0121 712 2000
Finance Director
John Gemmell 0121 712 2075
Group Company Secretary
Deborah Bateman 0121 712 2025
Head of External Relations
This information is provided by RNS
The company news service from the London Stock Exchange
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