DryShips Faces Pressure on Note Offering and Analyst Call

DryShips Inc. (NASDAQ: DRYS) faced some turbulent weather in the market on Monday. It has seen its shares drop by as much as almost 20% to a 52-week low, following a downgrade from a key analyst and an announcement withdrawing its planned debt financing.

The company announced Sunday that it planned to withdraw $700 million of its senior secured notes due to current market conditions. Company chairman and CEO, George Economou, mentioned that the company had a buyer lined up for some of the notes, which will allow for a little more flexibility. He said:

We continue to work on our plan to re-finance the $700 million, 5% Convertible Notes that are maturing on December 1, and we have earlier today signed the firm commitment letter from ABN for the Bridge Facility of up to $350 million, which now only remains subject to final documentation. This, together with cash in hand and the previously announced Nordea refinancing which would result in about $100 million of net proceeds, considerably narrows our actual funding gap and provides a clear path forward that makes us confident we will be able to refinance our convertible notes in a timely manner.

Considering the notes would be maturing on December 1, DryShips could be in a much worse position if it did not secure that financing with less than two months to go.

To add fuel to the fire, Imperial Capital issued a downgrade for DryShips to Underperform from its previous rating of Outperform. While we have not seen details of that call, it appears as though the price target was lowered all the way to $1.40 from a prior target of $4.00.

On Monday’s mid-afternoon trading, DryShips’ stock was down roughly 18.5% at $1.51 from its previous close of $1.86. The company’s shares have a consensus analyst price target of $3.32 and a 52-week trading range of $1.49 to $5.00. DryShips has a market cap is just over $660 million, according to Yahoo! Finance.

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