DryShips Inc. (NASDAQ:DRYS)

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.

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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) Gets Debt Re-Financed

DryShips Inc. – Nasdaq: DRYS

Greece-based DryShips Inc. announced an agreement for $200 million in refinancing through Sifnos Shareholders Inc. Shares of DRYS have, so far, reached $5.10 from yesterday’s close of $3.55 on heavy volume – a 40%+ increase. DryShips owns 13 Panamax drybulk carriers, and 6 offshore supply vessels – comprising 2 platform supply and 4 oil spill recovery vessels.

According to a press release provided by DryShips Inc.:

Under the terms of the New Revolver, Sifnos will extend a new loan of up to $200.0 million secured by all of the Company’s present and future assets except the MV Raraka which will continue to be financed by its existing commercial lender. The new loan will carry an interest rate of Libor plus 5.5%, is non-amortizing, has a tenor of 3 years, has no financial covenants and will be arranged at a cost of 2.0%. In addition, Sifnos will have the ability to participate in realized asset value increases of the collateral base in a fixed percentage of 30%.

Interestingly, yesterday DRYS slipped to a 52-week low of $3.51. Also interesting is that no analyst has issued a rating on DRYS for over two years. Current trading volumes, however, are six times the daily average and trader forums for the shares are experiencing large activity. Sales had increased from $1.08 million in 2011 to $2.19 billion in 2014 but last year the figure dropped to $0.97 billion.

Always perform your own due diligence before making any decisions regarding the buy or sale of any stock. The below data is provided without any guarantee of its accuracy.

Ticker Symbol DRYS
Last Price a/o 3:35 EST $5.08
Average Volume 4.86 million
Market Cap $4.3 million
Sales $66.1 million
Shares Outstanding 1.21 million
Share Float 0.87 million
Shortable Yes
Optionable Yes
Inside Ownership 26.40%
Short Float 33.56%
Short Interest Ratio 0.06
Quarterly Return -51.70%
YTD Return -98.61%
Year Return -97.63%