Report of Foreign Issuer (6-k)
May 12 2017 - 5:06PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2017
Commission File Number: 001-33655
PARAGON SHIPPING INC.
(Name of Registrant)
15 Karamanli Ave., GR 166 73, Voula,
Greece
(Address of principal
executive office)
Indicate
by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form
20-F
x
Form 40-F
¨
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
¨
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
¨
On
May 4, 2017, Paragon Shipping Inc. (the “
Company
”) entered into an exchange agreement (the “
Exchange
Agreement
”) with an unrelated third party and holder (the “
Holder
”) of $409,675 principal amount of
our issued and outstanding senior unsecured notes due 2021 that bear interest at a rate of 8.375% per year,
or
16,387 of such unsecured notes with a denomination of $25.00 each (collectively, the “
Notes
”), pursuant to which
the Holder agreed to exchange the Notes (the “
Debt Exchange
”) for a $275,000 principal amount convertible note
(the “
Exchange
Note
”). The Debt Exchange closed on May 11
, 2017.
The Exchange Note will
mature on May 4, 2018 and will not bear interest, except upon an event of default, as set forth in the Exchange Note.
The Exchange Note will
be convertible into the Company’s Class A common shares, par value $0.001 per share (“
Common Stock
”) at
a conversion price equal to 60% of the lowest volume weighted average price of the Common Stock during the 21 trading days prior
to the conversion date (the Common Stock, as converted, the “
Conversion Shares
”). At no time will the Holder
be entitled to convert any portion of the Exchange Note to the extent that after such conversion, the Holder (together with its
affiliates) would beneficially own more than 4.99% of our outstanding Common Stock as of such date. The Exchange Note contains
standard anti-dilution protection.
The Exchange Note includes
customary event of default provisions, and provides for a default interest rate of 18%. Upon the occurrence of an event of default,
the Holder may require the Company to redeem all or any portion of the Exchange Note (including all accrued and unpaid interest),
in cash, at a price equal to the greater of (i) the product of (A) the amount to be redeemed multiplied by (B) 127.5% (or 100%
if an insolvency related event of default) and (ii) the product of (X) the conversion price in effect at that time multiplied by
(Y) the product of (1) 127.5% (or 100% if an insolvency related event of default) multiplied by (2) the greatest closing sale price
of the Company’s Common Stock on any trading day during the period commencing on the date immediately preceding such event
of default and ending on the date the Company makes the entire redemption payment required to be made. The Company has the right
at any time to redeem all, but not less than all, of the total outstanding amount then remaining under the Exchange Note in cash
at a price equal to 127.5% of the total amount of the Exchange Note then outstanding.
The Exchange Agreement
contains customary representations, warranties and covenants by, among and for the benefit of the parties. The Exchange Agreement
also provides for indemnification of the Holder and its affiliates in the event that the Holder incurs losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses related to a breach by us of any of our representations, warranties or covenants
under the Exchange Agreement.
The Company’s
issuance of the Exchange Note is exempt from registration under the the Securities Act of 1933, as amended (the “
1933
Act
”) pursuant to the exemption from registration provided by Section 3(a)(9) of the 1933 Act. The Company’s
issuance of the Conversion Shares is exempt from registration under the 1933 Act pursuant to the exemption from registration provided
by Rule 903 of Regulation S. This Report of Foreign Private Issuer on Form 6-K shall not constitute an offer to sell,
the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
The foregoing descriptions
of the transaction and the transaction documents are not complete and are subject to and qualified in their entirety by reference
to the transaction documents, all of which are filed as exhibits hereto and are incorporated herein by reference. The transaction
documents have been included to provide investors and security holders with information regarding their terms. They are not intended
to provide any other financial information about us or our subsidiaries and affiliates. The representations, warranties and covenants
contained in the Exchange Agreement were made only for purposes of that agreement and as of specific dates; were solely for the
benefit of the parties to the Exchange Agreement; may be subject to limitations agreed upon by the parties, including being qualified
by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Exchange Agreement
instead of establishing these matters as facts; and may be subject to standards of materiality applicable to the contracting parties
that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any
description thereof as characterizations of the actual state of facts or condition of us or our subsidiaries or affiliates. Moreover,
information concerning the subject matter of the representations, warranties and covenants may change after the date of the Exchange
Agreement, which subsequent information may or may not be fully reflected in public disclosures by us.
The following exhibits
are filed herewith:
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
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PARAGON SHIPPING INC.
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Date: May 12, 2017
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By:
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/s/ GEORGE SKRIMIZEAS
|
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George Skrimizeas
|
|
Chief Operating Officer
|
Paragon Shipping (CE) (USOTC:PRGNF)
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