Paragon, which did not sell any of its shares pursuant to the offering, registered its offering with the Securities and Exchange Commission on Oct. 24. Paragon had been relying on completion of the equity offering to get back into compliance with the Exchange's listing standards. The company expects to hear from the Exchange again this week.
"At the outset of the public offering process, we were encouraged by our investment advisors' belief that the market was ready for a value added apartment REIT," says Paragon chief executive James Mastandrea. "We spent significant time and cost pursuing a public offering to benefit our shareholders and are disappointed that we were not able to complete the offering as we had planned."
Paragon was to use the bulk of the net proceeds from the offering ($62.6 million) to acquire 1,478 units in 10 apartment communities in Texas and Ohio. The seller of the apartment properties has agreed to extend the due diligence period until Feb. 15 with a closing date of no later than Feb. 28.
Paragon says it is reviewing and considering several financing alternatives to complete the acquisition but cannot give any assurance that the acquisition will be completed. "We continue to believe that funds are available for value added investments in apartment properties," Mastandrea says.
The American Stock Exchange told Paragon on Dec. 6 that it planned to proceed immediately with the filing of an application with the Securities and Exchange Commission to strike the company's common shares from listing and registration on Amex. ASE cited equity issues and years of losses as the reasons for the delisting, and the fact that the company had not taken its advice and completed a reverse stock split to address its low selling price, which is currently $0.12 per share. Paragon said at that time that it planned to appeal Amex's notice.
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