Hidden Benefit of DryShips Getting Waivers (DRYS)

DryShips Inc. (NASDAQ: DRYS) is seeing its shares surge on news that it has received waivers from lenders.  We have been expecting this for some time, and fairly recent reports of a share sale made this only look more likely that waivers would be granted.  This should even bring about some very positive trends after its recent issues brought up by auditors.

The drybulk and offshore oil services shipping company reached agreement with HSH Nordbank as agents on waiver terms for $654 million of the company’s outstanding debt under its credit facilities. This facility covers 23 of the company’s drybulk vessels.

This waiver and a recent possible share sale filing should negate part of those old going concern fears for one of its units.  Back on March 30, 2009, we noted about the auditors giving a ‘going concern ‘ note to the company’s Ocean Rig ASA unit.  It also recently completed a financing in April.  We can’t say 100% that those are gone, but a possible capital raise and a waiver from lenders should negate the fears there.

DryShips has traded 27 million shares after being open a mere 45 minutes, and so far this is up 15% at $7.03.  To show how volatile this one is, the 52-week trading range of $2.72 to $116.43 pretty much says it all.

Here is the most recent SEC Filing with that data on the terms allowed for a share sale, which looks like the company will be selling shares from time to time directly into the market by the placement agent.

Jon C. Ogg
May 15, 2009