Paunovic, while not naming any individuals involved, has revealed that Reading did try to get a deal to bring in a player from Liverpool on loan. Rhys Williams has been mentioned as a target.
Reading are currently under a transfer embargo, and could only complete loan deals or free transfers in January, subject to approval from the EFL.
"We tried, now we have to look in free agency for options," Paunovic told Berkshire Live.
"We tried a couple of loans with Liverpool, with Stoke. We've been very creative and active but this was the best we could do.
"We're going to look in the free agent market. We need to bring somebody who's ready now."
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