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Kalani Investments - Who They Are And Why They Love DryShips

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Kalani Investments - Who They Are And Why They Love DryShips
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In the past several months, DryShips Inc. (NASDAQ: DRYS) shareholders have become very familiar with the name Kalani Investments. But other than the name, there isn’t much to know about the mysterious firm founded in 1996 and domiciled in the British Virgin Islands.

According to filings, Kalani is an investment vehicle that is not directly affiliated with DryShips. After DryShips underwent three reverse stock splits in 2016, the company announced in November that it had secured $100 million in financing from Kalani, leaving many investors to speculate that DryShips CEO George Economou is actually the one pulling the strings at Kalani.

No Short Story

On the surface, new financing may seem like good news for DryShips and its investors, but the story doesn’t stop there. In December, Economou assumed most of DryShip’s outstanding debt. Shortly thereafter, the company announced a new $100 million financing round that diluted shareholders by raising the share count from 1.1 million to 33.8 million.

On Dec. 15, DryShips announced a “comprehensive refinancing, deleveraging and strategic repositioning” that included upping the company’s credit facility to $200 million. It also included a $33.5 million payment to Economou.

Kalani resurfaced with another $200 million refinancing agreement on Dec. 27. Within days, DryShips announced a new option contract to purchase 4 VLGC ships from other companies controlled by Economou at a total potential cost of $334 million for DryShips shareholders.

By Jan. 13, DryShips’ share count has expanded to 69.3 million. Even after another 1:8 reverse stock split on Jan. 19, the share count had ballooned back up to 107.9 million by Jan. 20 after DryShips utilized most of the remainder of its Kalani equity line.

Although Economou’s influence on Kalani is up for debate, traders have speculated that Economou is using Kalani to recapitalize DryShips and unload assets at the expense of DryShips shareholders. Incredibly, since Dec. 1, DryShips shares are down another 96.8 percent.

Shares of TOP SHIPS Inc (NASDAQ: TOPS) initially doubled last week after the company mentioned Kalani in an SEC filing. Traders are speculating that Economou may attempt to use Kalani to orchestrate a DryShips buyout of TOP Ships in the near future.

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