It is not every day that a stock logs more than 580% gain in a single session, but Paragon Shipping Inc. (NASDAQ:PRGN) did. However, that begs the inevitable question of how? Simple, the company provided some corporate updates and investors liked what came through their ears and the stock shot up. The natural question that follows such movements is whether the momentum is sustainable or the gains logged have anything to back them. You be the judge, here is the story.
Paragon Shipping Inc. (NASDAQ:PRGN) recently updated on a wide range of matters touching on newbuilding contracts with a Chinese company and litigation among others. The update was generally positive.
Paragon Shipping Inc. (NASDAQ:PRGN) somewhat amended its agreement with a Chinese shipbuilder called Yangzijiang to somehow give it some breathing room. The company announced that it had reached an agreement with Yangzijiang to delay the delivery of three drybulk carriers it had ordered. Instead of those vessels being delivered early, the first one will come on Sept. 30, 2016 and the second one will be delivered on Oct. 31, 2016. The last of the three vessels will be delivered on Nov. 30, 2016.
But Paragon did mention that the rescheduling of the deliveries was subject to certain conditions that it didn’t specify.
Cancellation of PIK Note obligations
Paragon Shipping Inc. (NASDAQ:PRGN) said it had escaped obligations linked to what it calls PIK Note. That is a Paid-in-Kind Note agreement that the shipper had with Bank of Ireland. The lender agreed to lift some financial burden on the company.
Paragon and its CEO, Michael Bodouroglou, are suing a paper over a report that claimed the company was on the brink of filing Chapter 11 bankruptcy. Tradewinds published a story that claimed the management of Paragon had obtained board approval to file for bankruptcy when indeed that was not the true position. Paragon claims that the false report damaged its stock price as well as its reputation and that of its officers. The company has filed a suit against the reporter and the Tradewinds.
In total, investors believe these updates are positive and they are willing to bet on the stock of Paragon Shipping Inc. (NASDAQ:PRGN).