DryShips Inc. (NASDAQ:DRYS) Shares Crumble On Stock Manipulation Claims

DryShips Inc. (NASDAQ:DRYS)

Shares of DryShips Inc. (NASDAQ:DRYS) crumbled in Friday’s trading session after the company became the subject of class action lawsuits over claims of stock manipulation. The stock was down by 27.91% to end the week at $2.17 a share. Last week’s sell off also came after the company effecting another reverse stock split and issuing an updated financial report.

Stock Manipulation Claims

DryShips Inc. (NASDAQ:DRYS) is an international shipping company that operates ocean cargo vessels worldwide. The firm operates through two segments – drybulk and offshore support. Founded in 2014, the company currently owns 13 Panamax Drybulk vessels, and 6 offshore support vessels.

The Greek carrier finds itself in a tight spot over stock manipulation claims that have seen it shed more than 90% in value over the last six months. Law firms behind the class action lawsuits allege that in a series of transactions beginning last year, DryShips Inc. (NASDAQ:DRYS) raised hundreds of millions of dollars by selling newly issued shares directly to Kalani Investments Ltd.

The money that came from Kalani allowed the shipping company to double the size of its fleet even as the stock continued to plunge.

Reports indicate that the company sold the vast numbers of newly issued shares to the British Virgin Island firm at a discount. The firm in return unloaded most of the shares immediately after the stock soared to all-time highs in November, followed by the stock’s plunge.

In their class action lawsuits, law firms allege that because Kalani purchased the shares with the intention of reselling them immediately the transactions amounted to ‘Pseudo underwriting.’

Reverse Stock Split

In a bid to counter the downward pressure, DryShips Inc. (NASDAQ:DRYS) has resorted to reverse stock splits as it tries to stay afloat. Late last year, the company carried out a 1:15 reverse stock split as it sought to strengthen the value of its share price. The company is also fresh from effecting a 1:7 reverse stock split as it tries to shore up the share price even further.

Extreme dilution is now a point of concern given the amount of DryShips Inc. (NASDAQ:DRYS) shares that are floating in the market. A massive net loss in the recent quarter has also rattled investors fuelling the sell-off wave that now threatens to push the stock to all-time lows. The company has already suspended debt payments arousing concerns over its financial stability.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

Don’t miss out! Stay informed on $DRYS and receive breaking news on other hot stocks by signing up for our free newsletter!

About the author: Marc has a degree in economics and a MSc. in Finance. Marc worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

DryShips Inc. (NASDAQ:DRYS) Plunges

DryShips Inc. (NASDAQ:DRYS)

DryShips Inc. (NASDAQ:DRYS) plunged by more than 30% after announcing a 1-for-5 reverse stock split of common shares. A shareholder’s annual general meeting last month approved the split, giving the board the mandate to determine the exact split ratio.

1-for-5 Reverse Stock Split

Reverse stock splits are normally used to strengthen a stock price if a security is in danger of falling below a key level. However, that was not the case after the Drybulk carrier announced its reverse stock split ratio.

DryShips Inc. (NASDAQ:DRYS) has underperformed the overall industry having traded below the $5 a share since May 15. Closing at record lows of $1.70 last week appears to have spooked the management team, prompting the reverse stock split that it now hopes will revitalize the sentiments of institutional investors.

The ocean-going cargo vessel’s 1-for-5 reverse stock split will come into effect on June 22 under the trading symbol ‘DRYS’. The split will reduce the number of the company’s shares to 4.8 million from 24.1 million.

“No fractional shares will be issued in connection with the reverse split of the issued common shares. Shareholders who would otherwise hold a fractional share of the Company’s common shares will receive a cash payment in lieu thereof at a price equal to that fraction to which the shareholder would otherwise be entitled multiplied by the closing price of the Company’s common shares on the Nasdaq Capital Market on June 21, 2017,” DryShips Inc. (NASDAQ:DRYS) in a press release.

Dilution Concerns

The 1-for-5 split is the second in a span of less than two months. Early last month DryShips initiated a 1-for-7 reverse stock split as it sought to revitalize investor’s attitudes towards the company. Last month’s split reduced the company’s shares to 9.6 million from 65.6 million. However, the share count more than doubled as the company sold more shares in private stock offerings as part of a capital raising drive.

Dilution has considerably overwhelmed DryShips Inc. (NASDAQ:DRYS) amidst growing financial health concerns. The stock is currently down by more than 90% for the year as fears of the stock dropping below the $1 a share mark continue to grow.

DryShips Inc. (NASDAQ:DRYS) dropped in Monday and Tuesday’s trading sessions and now stand at $1.02 – establishing a new 52-week low.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

Don’t miss out! Stay informed on $DRYS and receive breaking news on other hot stocks by signing up for our free newsletter!

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

DryShips Inc. (NASDAQ:DRYS) Announces Successful Delivery Of Its Newbuilding Suezmax Tanker And Commencement Of 5-Year Charter

DryShips Inc. (NASDAQ:DRYS)

DryShips Inc. (NASDAQ:DRYS) announced the delivery of a 159,855 deadweight ton Suezmax tanker. DryShips Inc. (NASDAQ:DRYS) expects a gross backlog of $25,000 per day and $43.1 million for the 5 years. The vessel was bought from and chartered out to companies connected to Mr. George Economou, DryShips’s Chairman and Chief Executive Officer. The whole transaction had the approval of the audit committee appointed by the company’s Board of Directors.

In other news, DryShips Inc. (NASDAQ:DRYS) announced securing a credit facility amounting to $150 million with KEXIM and ABN AMRO bank. The credit facility will go towards financing the delivery of the company’s four Very Large Gas Carriers (VLGC). The credit facility will be secured by the four VLGCs and an amortization profile of around 12 years. The facility will have an interest rate of LIBOR+.

The high specification VLGCs, still under construction at Hyundai Heavy Industries, will be delivered in June, September, October and December of this year and will be used for long term charters to leading oil companies. The four VLGCs will have a gross backlog of around $390 million.

While commenting on the transaction, Economou said the company has come a long way in negotiating the deal which started last year. He added that negotiations started with the company requesting lenders to restructure its debts. He applauded KEXIM and ABN AMRO for their support and helping arrange the company’s first bank credit facility since 2014.

Economou added that following the complete servicing of the new loan, DryShips Inc. (NASDAQ:DRYS) will have many of its vessels unencumbered. He added that in financial terms, the assets will be able to raise around $250 million or $19.13 per share subject to maintaining a modest 50% market value. He added that they will be working on securing financing for these assets. This will enable the company to rally its efforts and resources towards acquisition of more vessels without the need to raise more equity.

DryShips Inc. (NASDAQ:DRYS) lost 3.89% in the previous trading session to close at $2.72 on a volume of 3.62 million shares.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

DryShips Inc. (NASDAQ:DRYS) Acquires Kamsarmax Drybulk Carrier for $24M on the Back of Debt Concerns

DryShips Inc. (NASDAQ:DRYS)

DryShips Inc. (NASDAQ:DRYS) is aggressively expanding its fleet even as it continues to face uncertainty in the market – on the back of growing concerns over its debt levels. The shipping company acquisition spree shows it is in top gear, having confirmed the acquisition of one 82,129 DWT Kamsarmax.

DryShips $24 Million Acquisition

DryShips Inc. (NASDAQ:DRYS) has confirmed the acquisition of the Kamsarmax Drybulk Carrier in a $24 million deal. Should everything goes as planned, the company expects to take delivery of the vessel in the second quarter of 2017.

“We are very excited to have started taking delivery of our previously announced acquisitions and also continue to grow our fleet with a new acquisition of one more modern vessel. The DryShips new era has official started and is expected to be accretive to our earnings and cash flows,” said Chief executive officer, George Economou.

Early in the year, DryShips Inc. (NASDAQ:DRYS) announced an $83.5 million deal for the acquisition of a Very Large Gas Carrier under construction at Hyundai. The investment spree comes at a time when the company is facing an uncertain future. Plunging shipping rates and too much debt have threatened to run the company to the ground.

DryShips Unending Problems

A push by the company to diversify its areas of operations also appears to have taken a hit. DryShips has struggled to achieve substantial growth  looking while for opportunities on offshore oil drilling rigs as well as tankers and gas carriers. Its offshore drilling subsidiary filing for bankruptcy all but provides a clear picture of the mess that the company currently finds itself in.

Investors have already taken note of the company’s unending problems seen by the stock performance since the start of the year. The stock is currently down by nearly 100% having exploded by more than 2000% last year.

Given that the stock has shed almost its entire value, one would expect the company to start lowing on capital expenditures as a way of protecting its future. In a recent press release, the company announced plans to become debt free over the next four years. How successful the company will be on this front awaits to be seen  – it is looking for ways to access bank debt financing for the first time since 2014.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.