DryShips Closes Private Placement, Plans Rights Offering

Greek shipowner DryShips, which has been entangled into legal action recently over share sale schemes, said that it has completed the sale of common shares to entities affiliated with its Chairman and Chief Executive Officer, George Economou for USD 100 million.

The private placement consisted of 100% of the issued and outstanding equity interests of Shipping Pool Investors Inc., which holds a 49% interest in tanker pool operator Heidmar Holdings LLC, along with the termination of the participation rights by and between DryShips and Mountain Investment.

The transaction also includes forfeiture by Sifnos Shareholders Inc., also an entity affiliated with Economou, of all outstanding Series D preferred shares (which carry 100,000 votes per share) of the company and the repayment of USD 27 million under DryShip’s unsecured credit facility with Sierra.

The shipowner said that it did not receive any cash proceeds from the private placement.

The common shares sold in the private placement are subject to a lock-up agreement until six months from the completion of the sale and the completion of the company’s previously announced rights offering.

To that end, the company said it intends to launch the rights offering of shares of common stock par value USD 0.01 per share.

The offering is expected to be made through the pro-rata distribution of non-transferrable subscription rights to purchase up to 36,363,636 shares at a price of USD 2.75 per share. The shares will be offered to the company’s shareholders on August 31, 2017, resulting in gross proceeds of up to USD 100 million.

As explained, each subscription right will entitle their respective holder to a right to purchase approximately 1.1526 shares at a subscription price of USD 2.75 per share.

In addition, DryShips has inked a backstop purchase agreement with Sierra, pursuant to which Sierra will commit to buying common stock shares that are not issued to existing shareholders.

DryShips said that its CEO and his affiliates agreed not to exercise any rights they may have in the offering outside of the backstop commitment.

The cash proceeds from the offering are expected to be used for general corporate purposes and/or vessel acquisitions and/or to repay the Sierra credit facility.

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