DryShips plans bulker, drill ship purchases

DryShips Inc. said it plans a major expansion and has entered into agreements to take over the equity interests of single-purpose companies owning four existing Capesize dry bulk carriers and five ships due to be delivered in 2009 and 2010.

The ships are being acquired from entities controlled by clients of Cardiff Marine Inc., including George Economou, chairman and chief executive officer of DryShips.

This transaction will enable DryShips to further grow its fleet and expand its market share at a time when our competitors are not only constrained by the difficult credit environment, but do not have the ability to find quality assets on such a scale from the second-hand sale and purchase market,Economou said. These vessels are high specification sister vessels and following this transaction our company's fleet will be among the most modern in the industry, thus further enhancing the quality and longevity of our future earnings. In addition, the acquired fleet has a prompt delivery schedule and five of the nine vessels come with time charter employment attached ranging between five and six years.

DryShips said it will pay $689.6 million in exchange for the shares of the single-purpose companies in the form of 19.4 million shares of DryShips Inc. common stock. The company will also assume $216.3 million of existing debt and $262 million in remaining shipyard installments related to the vessels, which will be financed by debt facilities that are already in place except for $16 million that will be funded by DryShips.

Following the issuance of the new shares to the sellers, there will be nearly 63 million DryShips shares outstanding.

Like most dry bulk shipping stocks, shares in DryShips have plummeted since earlier this year. DryShips shares closed Friday on the Nasdaq at $31.50, close to its 52-week low of 30.52 and way below its high of $131.34.

DryShips also said its wholly owned subsidiary, Primelead Shareholders Inc., has entered into an agreement to take over equity interests of a holding company that owns two advanced capability drillships for use in ultra deepwater drilling (UDW) locations controlled by clients of Cardiff Marine.

The drillships are to be constructed by Samsung Heavy Industries Co. Ltd. (SHI) and are expected to be delivered from the shipyard in the fourth quarter of 2010 and the first quarter of 2011.

We are entering the offshore drilling segment with the same strategic vision we viewed the dry bulk market back in 2005 when DryShips went public, Economou said. We believe we are entering an industry that has very solid prospects for the next three to five years and we aim to take advantage of this.

DryShips, based in Greece, is an owner and operator of dry bulk carriers that operate worldwide. It owns a fleet of 54 dry bulk carriers and six drilling units. 

Source: American Shipper