18th Jan 2008 07:00
Paragon Group Of Companies PLC18 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 £287million rights issue (the "Rights Issue Announcement") to enable repayment ofthe Group's corporate loan facility, which falls due on 27 February 2008 (the"Corporate Facility"). The Rights Issue Announcement includes a description ofthe background to and reasons for the rights issue and the Group's currenttrading and prospects. Investors are asked to read that announcement for a morecomprehensive explanation of material events and transactions that have takenplace 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 ofthe financial position and performance of the Group. No information contained in this announcement conflicts with or is in additionto the information contained in the Rights Issue Announcement. This announcementshould be read in conjunction with the Rights Issue Announcement. Interim Management Statement Since 30 September 2007, the Group's business has continued to operateprofitably in line with management's expectations. Funding available under theGroup's warehouse loan facility (the "Warehouse Facility") has enabled the Groupto continue to lend during this period and as at 30 November 2007, the Group'sportfolio of assets outstanding amounted in total to £11.3 billion. Funding under the Warehouse Facility for new advances is, however, expected tocease 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 notbeen possible to agree commercially acceptable terms for any extension of theavailability period for new advances under the Warehouse Facility. In order to be in a position to repay the Corporate Facility on its due date andas a result remove the risk of default under that facility, the Company isproposing a fully underwritten rights issue to raise an amount before expensesof £287 million. The proceeds of the rights issue together with the existingcash resources of the Company will ensure the repayment of the CorporateFacility thereby protecting the shareholder value in the Group. If the rights issue proceeds, the Board will continue to seek appropriateadditional working capital and warehouse financing to enable the Group tooriginate further new business in the future and to act as an originator ofassets for third parties through the Group's network of brokers and otherintermediaries, thus generating commission income rather than net interestmargin as at present. This will be in addition to any origination permitted within the existingfunding arrangements, comprising a small volume of mortgage lending until 28February 2008 as Paragon completes on outstanding mortgage offers. Beyond thisdate, new mortgage business is likely to be limited to further advances onexisting mortgages financed by available redemption funds in the Group's specialpurpose vehicle subsidiaries. Some new consumer finance lending will be possibleusing substitution capacity in existing financing vehicles. Furthermore,originations under any new warehouse facilities which may be arranged are likelyto be at significantly lower volumes than recent levels. Taking account of the rights issue proceeds and the terms of the WarehouseFacility, 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 dictatedby its ability to regain access to the asset backed securitisation markets oncommercially acceptable terms. For further information, please contact: Nigel Terrington 0121 712 2024Chief Executive Nicholas Keen 0121 712 2000Finance Director John Gemmell 0121 712 2075Group Company Secretary Deborah Bateman 0121 712 2025Head of External Relations This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Paragon Group