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DryShips Inc. Reports Financial and Operating Results for the Second Quarter 2017


DryShips Inc. Reports Financial and Operating Results for the Second Quarter 2017

DryShips Inc. Reports Financial and Operating Results for the Second Quarter 2017

ATHENS, GREECE--(Marketwired - Aug 30, 2017) - DryShips Inc. (NASDAQ: DRYS), or DryShips or the Company, a diversified owner of ocean going cargo vessels, today announced its unaudited financial and operating results for the quarter ended June 30, 2017.

Recent Developments

  • Private placement

    On August 29, 2017, the Company announced the closing of its previously announced sale of common shares of the Company to entities affiliated with its Chairman and Chief Executive Officer, Mr. George Economou ("Mr. Economou") for aggregate consideration of $100 million at a price of $2.75 per share (the "Private Placement"). The Company did not receive any cash proceeds from the Private Placement.

    Mr. George Economou, the Company's Chairman and Chief Executive Officer, has agreed, either directly or through his affiliated entities, to refrain from re-selling for a six month period any common shares of the Company acquired by him in the Private Placement and previously announced Rights Offering; and the Company has agreed not to conduct any equity offerings until after December 31, 2017, without the prior approval of the majority of its unaffiliated shareholders.

  • Heidmar acquisition

    As of August 29, 2017, following the closing of the Private Placement, the Company owns 49% of Heidmar Holdings LLC ("Heidmar") pursuant to a joint venture with Morgan Stanley. Heidmar is one of the largest independent tanker pool operators worldwide, commercially managing about 100 vessels.

  • Termination of Participation Rights

    As of August 29, 2017, following the closing of the Private Placement, the Deed of Participation Rights with Mountain Investments Inc., an entity affiliated with the Company's Chairman and CEO Mr. George Economou, has been terminated.

  • Credit Facility with Sierra Investments Inc.

    As of August 29, 2017, following the closing of the Private Placement, the balance of the Company's credit facility with Sierra Investments Inc. (the "Sierra Credit Facility"), an entity affiliated with the Company's Chairman and CEO, Mr. George Economou, stands at $173 million.

    Following the outcome of the previously announced Rights Offering and determination of the number of shares to be purchased pursuant to the backstop agreement with Sierra Investments Inc. relating to the previously announced Rights Offering, the Sierra Credit Facility will be refinanced with a new loan facility secured by assets, with a loan to value ratio of 50%, a tenor of 5 years, no amortization and the margin over LIBOR will be decreased to 4.5%. No arrangement fees or otherwise, will be charged in connection with the refinancing.

  • Retirement of Series D Preferred Shares

    As of August 29, 2017, pursuant to the closing of the Private Placement, the Series D Preferred Shares held by Sifnos Shareholders Inc., an entity affiliated with the Company's Chairman and CEO Mr. George Economou have been retired.

  • Fleet Renewal Status

    Since November 2016, the Company has raised approximately $688 million of equity that has been deployed to acquire modern vessels in multiple segments in order to take advantage of historically low vessel values and renew and diversify the Company's aging fleet.

    In aggregate, the Company entered into agreements to acquire 17 vessels, of which 12 are with unaffiliated third parties, with an average age of two years for a total cost (book value basis) of approximately $772.4 million, of which $606.2 million has been advanced as of this date.

    During the last few months the Company has successfully taken delivery of 14 vessels that are now starting to generate revenue.

    As a result of the successful execution of its fleet renewal program and in connection with the private placement and other transactions previously announced on August 11, 2017, the Company terminated the $226.4 million common stock purchase agreement, dated April 3, 2017, by and between the Company and Kalani Investments Limited, a company organized and existing under the laws of the British Virgin Islands.

Mr. George Economou, the Chairman and CEO of Dryships, commented:

"We are pleased to complete another step in the transformation of DryShips. Going forward, DryShips can look to the future with optimism given its strong balance sheet and young and diversified fleet being in prime position to take advantage of any recovery in the underlying shipping markets it operates in."

All of the related party transactions referred to herein have been approved by the independent members of the Company's board of directors pursuant to arms-length negotiations and deliberations, including the rendering of third party fairness opinions and/or third party broker valuations.

Updated Key Information as of August 30, 2017

  • Cash and cash equivalents: approximately $77.2 million (or $1.14 per share)

  • Book value of vessels, including advances: approximately $668.0 million (or $9.84 per share)

  • Debt outstanding balance: approximately $210.5 million

  • Number of Shares Outstanding: 67,911,072

Litigation Update

Various complaints have been filed in the Marshall Islands and the United States alleging various violations by DryShips and/or two of its officers in connection with the securities laws of the United States and the laws of the Republic of the Marshall Islands requesting differing amounts of damages that in some instances have not yet been quantified. DryShips and its management believe these complaints are without merit and intend to vigorously defend themselves against these allegations.

Other Events

The Company has also received a subpoena from the Securities and Exchange Commission ("SEC") requesting certain documents and information from the Company in connection with offerings made by the Company between June 2016 and July 2017. The Company is providing the requested information to the SEC.

Fleet List

The table below describes the Company's fleet as of August 30, 2017, including vessels the Company has agreed to acquire:

    Year       Gross rate   Redelivery    
    Built   DWT   Per day   Earliest   Latest
Drybulk fleet                    
Bargara   2002   74,832   Spot   N/A   N/A
Capitola   2001   74,816   Spot   N/A   N/A
Catalina   2005   74,432   Spot   N/A   N/A
Ecola   2001   73,391   Spot   N/A   N/A
Levanto   2001   73,925   Spot   N/A   N/A
Ligari   2004   75,583   Spot   N/A   N/A
Maganari   2001   75,941   Spot   N/A   N/A
Majorca   2005   74,477   Spot   N/A   N/A
Marbella   2000   72,561   Spot   N/A   N/A
Mendocino   2002   76,623   Spot   N/A   N/A
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