By midafternoon, shares of the drybulk shipping company had taken off 13.1% to $6.36.
On Tuesday, the microcap announced it had commenced an underwritten offering of Class A common stock. The Athens-based company plans to offer 5.9 million shares at $6.25 a share, a 14.6% discount to Tuesday's close of $7.32 a share. Underwriters will also have a 30-day option to purchase an additional 885,000 of Class A common shares.
Net proceeds of around $34.5 million will be reinvested in new vessels and other general corporate purposes such as debt repayments.
The offering is expected to close on Feb. 18.
Jefferies acted as sole book-running manager and Maxim Group as lead manager of the offering.
TheStreet Ratings team rates PARAGON SHIPPING INC as a Sell with a ratings score of D. The team has this to say about their recommendation:
"We rate PARAGON SHIPPING INC (PRGN) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly decreased to $0.18 million or 94.27% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, PARAGON SHIPPING INC has marginally lower results.
- PRGN's debt-to-equity ratio of 0.77 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.38 is very low and demonstrates very weak liquidity.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Marine industry and the overall market, PARAGON SHIPPING INC's return on equity significantly trails that of both the industry average and the S&P 500.
- 43.60% is the gross profit margin for PARAGON SHIPPING INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, PRGN's net profit margin of -56.15% significantly underperformed when compared to the industry average.
- This stock has increased by 100.82% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in PRGN do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- You can view the full analysis from the report here: PRGN Ratings Report