At the risk of angering readers with a now over-used phrase, the credit crunch and the ensuing global economic slowdown have claimed another victim today in the form of mortgage lender Paragon.
Shares in the group have plunged 36p, or 35%, to 66p - its lowest in 14 years - after announcing it plans to raise £287m in a heavily discounted share sale.
Shareholders will vote on the proposal on January 28 at an extraordinary general meeting. They are being offered the right to buy 25 new shares for every one they own following a share consolidation.
The company had announced back in November that it might need to raise that amount of money, but the huge discount - 90.2% to the closing price yesterday - and ongoing fears about Paragon's future as financial markets still suffer, has sent investors into a huge panic.
As analysts at Numis Securities say: "Although the proceeds will relieve the immediate repayment liability, we believe that Paragon is one of the UK lenders most at risk from falling UK house prices."
The rights issue is fully underwritten by Swiss bank UBS, and will be used to repay the group's £280m revolving credit facility by the end of February, when it matures.
