DryShips Inc. (NASDAQ:DRYS) (DryShips), a diversified owner of ocean-going cargo vessels, yesterday announced its unaudited financial and operating results for the quarter ended March 31, 2017.
Updated Key Information as of May 10, 2017:
- Cash and cash equivalents: approximately $340.7 million (or $5.05 per share)
- Book value of vessels, net: approximately $286.2 million (or $4.25 per share)
- Sifnos Loan Facility balance: approximately $200.0 million
- Number of Shares Outstanding: 67,401,964
On May 10, 2017, the Company entered into an agreement with an entity affiliated with the Company’s Chairman and CEO, Mr. George Economou, to acquire one 158,000 deadweight tons Suezmax tanker currently under construction in China. The Company will finance the total gross purchase price of approximately $64.0 million using cash on hand and expects to take delivery of the vessel during May 2017. The vessel will be time chartered back to the seller and employed from the time of delivery under a five-year time charter plus optional periods in charterer’s option at a base rate plus profit share. The charterer will also be granted purchase options at the end of each firm period. The total expected backlog under the time charter, assuming an average spot market for Suezmaxes for the next 5 years of $25,000 per day is estimated to be approximately $43.1 million.
The transaction was approved by the audit committee of the Company’s Board of Directors and the independent members of the Company’s Board of Directors.
The Company has now fully repaid its last commercial loan facility and following the Sifnos Loan Facility’s latest amendment, announced on April 10, 2017, the Company has completed the restructuring of its balance sheet over the last 6 months, resulting in all of the Company’s assets being unencumbered.
Earlier this month, the Company received a firm commitment from a major European bank and an Asian export credit agency for a secured term loan facility of up to $200 million to partly finance the delivery of its four Very Large Gas Carriers (VLGCs). The commitment remains subject to documentation and successful syndication.
Recent Equity Issuances and Use of Proceeds
The Company has raised approximately $570 million of equity over the last six months that has been deployed to acquire modern vessels in multiple segments in order to take advantage of historically low vessel values.
On aggregate, the Company entered into agreements to acquire 17 vessels, of which 12 are with unaffiliated third parties, with an average age of 2 years for a total cost of approximately $765.5 million, of which $219.2 million has been advanced as of this date.
In connection with the above acquisitions the Company is now engaged in four different shipping segments: drybulk, comprising of 13 Panamax, 5 Kamsarmax and 4 Newcastlemax drybulk carriers; tankers, comprising of 2 Aframax vessels, 1 Suezmax vessel and 1 Very Large Crude Carrier (VLCC); liquefied petroleum gas carriers, comprising of 4 VLGCs; and offshore support, with 2 platform supply and 4 oil spill recovery vessels.
Indicative Fleet Earnings Capacity
On an annual basis, assuming all the vessels we have agreed to acquire have been delivered, that vessels are fully utilized and earn $16,000 per day for Newcastlemaxes, $12,000 per day for Kamsarmaxes, $10,000 per day for Panamaxes, $18,000 per day for Aframaxes, $25,000 per day for Suezmaxes and $30,000 per day for very large crude carriers (“VLCCs”), and the rest of the vessels in the Company’s fleet that are employed under time charters will earn their respective fixed rates, the Company estimates for indicative purposes that its active fleet (i.e. excluding laid up vessels in our offshore support fleet) will generate EBITDA(1) of approximately $77.0 million.
Earlier this year, the Company has initiated a new dividend policy. Under this policy, DryShips expects to pay a regular fixed quarterly dividend of $2.5 million to the holders of its common stock. In addition, at its discretion, the Board may decide to pay additional amounts as dividend each quarter depending on market conditions and the Company’s financial performance, over and above the fixed amount.
As of today, two consecutive dividends have been declared.
Any future dividends will be dependent upon the Company’s earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in the Company’s loan agreements, the provisions of Marshall Islands law affecting the payment of distributions to shareholders and other factors
George Economou, Chairman and Chief Executive Officer of the Company, commented: “DryShips has come a long way since last year when we were fighting for the Company’s survival. Since then we have cleaned up the Company’s balance sheet and almost doubled our fleet by acquiring modern quality vessels. With this rapid expansion phase behind us we look forward to taking delivery of the vessels we have acquired in the last few months at historically low asset values and starting to generate revenue that will improve our bottom line and demonstrate the earnings capacity of our fleet over the next few quarters.”