DryShips Inc. (DRYS) Tanks Again After Debt Agreement, Closing Of Direct Offering

DryShips Inc. (DRYS) Tanks Again After Debt Agreement, Closing Of Direct Offering

DryShips Inc. (NASDAQ:DRYS) stock got killed again on Tuesday as investors bailed out of a sinking ship. The stock has been all over the place lately as investors ponder the company’s continuing restructuring and repeated attempts to keep its stock listed on the NASDAQ. DryShips skyrocketed on Friday and then tanked this week after the company said that it had closed the registered direct offering it had previously announced.

DryShips rises and falls with the tide

Shares of DryShips plummeted on Tuesday, falling 31.65% to close the regular trading hours at $6.22. The stock surged on Monday morning, skyrocketing by nearly 40% after the company announced that it had struck a deal with one of its lenders. It has been teetering on the edge for a good part of this year, as have many other bulk-dry shippers.

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Debt has weighed heavily on it, but on Monday, it revealed that one of its lenders agreed to write off about half of the outstanding principal and interest on one of its loans. DryShips said it had paid back about $8.2 million of the principal and must still pay $2 million more on that loan over the next nine months to fully pay off that debt.

Data from Sentieo reveals that the company had about $213.5 million in long-term debt as of the end of June, although that probably covers more than one lender. As a result, it’s unclear just how much money DryShips saved through this agreement, but still, progress is progress. At the end of June, the company was in breach of some of its financial covenants, and five bank facilities had matured and it had not made the final balloon installments or other payments. The lenders had declared a default event, and DryShips had suspended payments on its debt.

DryShips closes registered direct offering

Also on Monday, the shipping company said it had closed the registered direct offering for the new Series E-1 Convertible Preferred Shares, warrants to buy 30,000 Series E-1 Convertible Preferred Shares, warrants to buy 50,000 new Series E-2 Convertible Preferred Shares, prepaid warrants to buy another 372,874 common shares, and 100 common shares. The direct offering was made to an unnamed institutional investor that is not affiliated with the company.

DryShips said the gross proceeds from the offering amounted to about $20 million, and it could receive up to another $80 million if the buyer exercises all of the warrants to buy preferred shares.

Short squeeze in DryShips stock?

DryShips is a very interesting stock with some strange activity lately. As of the last reporting date, there were about 1.7 million shares sold short, indicating very high short interest. The NASDAQ halted trading on the stock last week after a period of extreme volatility involving about a 2,000% increase. The stock exchange said it was awaiting information from the company. When trading on DryShips resumed, it plunged 85%.

There’s been debate about a short squeeze, with most saying that there has indeed been a short squeeze going on, although not everyone is convinced.

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