DryShips surges after loan
DryShips saw its share price rise sharply Monday after the New York-listed shipowner announced a loan from spin-off Ocean Rig.
George Economou is chief executive officer of DryShips and Ocean Rig.
Shares in the George Economou-led bulker and tanker company, which owns a majority stake in Ocean Rig, rose by 14.8\% to hit $1.94 in mid-afternoon trading on the Nasdaq stock exchange. It was the biggest gainer among US-listed shipping shares on a day that was broadly mixed for stock prices in the sector.
As TradeWinds reported earlier in the day, Ocean Rig agreed to provide a $120m loan to DryShips to help it repay $700m in 5\% convertible notes that are due in November.
The rig and drillship owning spin-off’s helping hand comes a week after Athens-based DryShips withdrew an offering for new $700m secured notes. Economou, DryShips’ largest shareholder, is chief executive officer of both companies.
The shipowner’s shares plummeted after the bond offering fell through, as concerns emerged that the company could turn to more dilutive measures to raise cash.
Ocean Rig’s shares inched up by 1.7\% so far today, after the company also announced $1.1bn worth of drillship contract extensions with Petrobras.
But analyst JR Lowe, who follows the oil services sector for investment bank Cowen, said Ocean Rig’s relationship with DryShips is the major reason why its shares trade lower than its peers in relation to net asset value.
“Transactions such as today’s loan is further reinforcement of this,” he wrote in a note to clients.
Economou said the loan will be repaid as soon as possible.
“The loan from Ocean Rig to Dryships is just a backstop in case Dryships need more time to execute on its various alternatives to refinance it Convertible Notes due December 1, 2014,” he said.
source:www.tradewindsnews.com
