Paragon Shipping Inc. (NASDAQ: PRGN) today debunked a statement calling a February 18 Tradewinds report stating its board of directors had approved a Chapter 11 bankruptcy filing “totally untrue”, sending the stock soaring to a high of $3.94 from a day low of $2.22 and settling at $2.64 at market close. Paragon Shipping Inc. is an international shipping company specializing in the transportation of drybulk cargoes. The Company’s vessels are able to trade worldwide in a multitude of trade routes carrying a wide range of cargoes covering a number of industries.
On April 26, 2016, the Company and Mr. Michael Bodouroglou, the Company’s Chairman, President, Chief Executive Officer and Interim Chief Financial Officer, filed a law suit against Tradewinds and their financial reporter, Mr. Joe Brady Stamford for defamation damages. Paragon believes that such false statements had a negative impact on the Company, its reputation and stock price. The lawsuit was submitted before the Prosecutor of the Criminal Court of Athens.
In July of 2015, Paragon was trading at over $45.00 a share, the Company seemingly taking initiatives to restructure its stock by rolling the stock back by one share for every 38, ultimately tightening up the float to under 1,000,000 shares. Paragon reported revenue over the past four quarters of about $38 million, down 24% from approximately $50 million in 2013, making it increasingly difficult for Paragon to service its roughly $157 million in debt. In addition, the company reported that it was unable to make a $500 million payment on senior unsecured notes due February to creditors, which pays a hefty annual interest of 8.375%.
On the upside, The Company has entered into an agreement with Jiangsu Yangzijiang Shipbuilding Co., or Yangzijiang, to extend the deliveries of its three Kamsarmax newbuilding drybulk carriers to September 30, 2016, October 31, 2016 and November 30, 2016.
In January 2016, the Company agreed with Bank of Ireland to apply the total net proceeds from the sale of M/V Kind Seas towards an immediate prepayment of the loan facility. An amount of $2.2 million was written-off and the remaining amount of $2.2 million, plus accrued interest, was converted into a PIK Note. The PIK Note was non-amortizing and had a maturity date of December 31, 2020, at which time it would be repaid at par. Interest on the PIK Note would accrue on a quarterly basis at an interest rate equal to the aggregate of 2.5% and the applicable LIBOR, and would be treated as payment-in-kind. On April 11, 2016, the Company received a notice of cancellation, pursuant to which it was discharged from all of its obligations under the PIK Note.