ATHENS, Greece (December 24, 2012) - Paragon Shipping Inc. (NYSE: PRGN) ("Paragon Shipping" or the "Company"), announced today that on December 24, 2012 it entered into an agreement to sell 4,901,961 newly-issued shares of the Company's common stock to an entity affiliated with Mr. Michael Bodouroglou, the Company's Chairman and Chief Executive Officer, for total consideration of $10 million.  The transaction closed on December 24, 2012, and the proceeds will be used by the Company for working capital purposes.  In addition, the Company will have the right, but not the obligation, to repurchase these newly-issued shares, at the same price per share at which they were sold in this private placement, at any time prior to the earlier of (i) the execution by the Company of definitive documentation relating to the satisfactory amendments of the Company's outstanding loan agreements and (ii) March 29, 2013.  The agreement also grants customary registration rights in the newly-issued shares.  The relevant agreements in connection with this private placement were approved by the independent members of the Company's Board of Directors.  In addition, any exercise of the Company's repurchase right described above will be approved by the independent members of the Company's Board of Directors in consideration of their fiduciary duties to the Company and its shareholders.

Commenting on the private placement, Michael Bodouroglou, the Company's Chairman and Chief Executive Officer stated, "In order to remove any uncertainty in satisfying a key condition precedent stipulated under our amended loan agreements, I have agreed with the Independent Members of the Board of Directors to purchase $10 million worth of shares in Paragon.  This transaction strengthens the Company's financial position and ensures that it continues to meet NYSE listing requirements."