The total paid for the 25% remaining Primelead interest is a one-time $50 million cash payment on closing of the transaction as well $280 million face value convertible preferred stock. The convertible shares will mandatorily convert into common shares of DryShips at a 27.5% premium to the established DryShips common share price of $5.36 per share in four equal increments that correspond to the contractual delivery of the four newbuilding drillships.
The preferred stock comes with a 6.75% annual cumulative dividend payable in additional shares of preferred stock, and can also be converted at any time by the holders at 42.9% premium to the established DryShips common share price of the $5.36 per share. Terms of this deal were negotiated by and approved by the company’s audit committee.
The properties are The Eirik Raude and the Leiv Eiriksson, and four newbuilding drillship contracts for Hulls 1837, 1838, 1865 and 1866. Upon delivery, the company noted that Primelead will have one of the youngest and most sophisticated fleets of ultra deepwater drilling rigs and drillships in the industry. The newbuilding drillships have contractual delivery dates commencing in the fourth quarter of 2010 and ending in the third quarter of 2011. In addition to its drilling rig assets, Primelead owns Ocean Rig ASA which manages the commercial, operational and technical aspects of the six drilling rig assets.
DryShips shares closed up 1.15% at $5.26 in regular trading, and shares are trading down at $5.10 in the after-hours session.
Jon C. Ogg
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