Economou buys from DryShips

DryShips has struck deals worth $536m to sell its 10 tankers to George Economou, its chief executive and largest shareholder.

The transactions mark the end of the US-listed owner’s efforts to spin off its tanker assets as Tankships Investment Holdings in a New York initial public offering (IPO).

Tankships said in a filing it was withdrawing its IPO application “due to market conditions.”

“Ultimately, we believe the sale of the tankers as opposed to an initial public offering of our tanker fleet is the best way to immediately realise maximum value,” said DryShips chief financial officer, Ziad Nakhleh.

Suezmax quartet

Private companies controlled by Economou will pay $245m for four suezmaxes. The entities will pay 20\% up front for the ships, and they will pay the rest upon deliveries scheduled between 1 July and 31 October.

Athens-headquartered DryShips said that it also struck a deal that could see it sell six aframax tankers to Economou for $291m. That agreement has yet to be finalised.

Economou, a Greek shipowner, has until 30 June to make a firm commitment on the sextet.

The aframax deal has a similar 20\% down payment requirement.

$150m in free cash

The sales provide DryShips with some $150m in free cash, after it pays off secured debt on the ships. The company plans to use the proceeds to pay down a bridge loan with Dutch bank ABN Amro.

But Wall Street analysts have long bemoaned such sale-and-purchase (S&P) transactions between the company and its high-profile founder.

DryShips’ tanker fleet
Name	Built	Dwt	Type
Bordeira	2013	158,513	suezmax
Petalidi	2012	158,532	suezmax
Lipari	2012	158,425	suezmax
Vilamoura	2011	158,622	suezmax
Alicante	2013	115,708	aframax
Mareta	2013	115,796	aframax
Calida	2012	115,812	aframax
Saga	2011	115,738	aframax
Daytona	2011	115,896	aframax
Belmar	2011	115,904	aframax

Nakhleh said that because the sales are related-party deals, DryShips followed due process before today’s announcement. The audit committee, made up of independent board members, approved the contracts. The sales price is a fair market value, he said.

Economou’s ‘extra mile’

The finance chief said Economou’s 20\% advance payments is more generous than the market standard 10\% deposit for S&P deals, and that he invested $80m in DryShips last year and signed a personal guarantee for the ABN Amro loan.

“Mr Economou has once again demonstrated his willingness to go the extra mile to support the best interests of DryShips,” said Nakhleh.

VesselsValue.com, a valuation website by shipbroker Seasure Shipping, lists the tankers as collectively worth nearly $561m.

In addition to the tankers, DryShips owns 39 bulkers and a controlling stake in drilling contractor Ocean Rig.

source:www.tradewindsnews.com