In a statement to the London Stock Exchange, the lender said that it had been unable to secure commercially viable terms to renew its warehouse facility, meaning it would be unable to fund cases after its current deal expired at the end of February.
While it hoped to raise £287 million from shareholders through a rights issue, enabling it to repay its corporate facility and maintain the viability of the company, its lack of funding would make it unable to offer new business for the foreseeable future.
The statement said: ‘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.
"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.
‘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.’
Ying Tan, managing director at The Buy-to-Let Business, said: “The impact on the market happened a couple of months ago when Paragon priced itself out of the market.
"It’s unfortunate as it always delivered good fixed rate products and there is now a gap in the market. However, the market moves on and the business is now being placed elsewhere.”
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