DryShips Inc. (NASDAQ: DRYS) a global provider of marine transportation services for drybulk cargoes announced on Dec. 10 that it has agreed to cancel the previously declared acquisition of four Panamax dry bulk carriers, which was announced on July 3 2008, from companies beneficially owned by George Economou, Chairman and CEO of DryShips Inc.
The aggregate purchase price of $400m would have represented a significant cash outflow from the company’s cash reserves given that the company had not obtained bank financing for the acquisition. The Audit Committee of DryShips Inc. concluded that due to the significant deterioration in the dry bulk market since the time the agreements were entered into, it would not be in the best interest of DryShips Inc. to consummate the transaction. The company will seek to amend, wherever possible, the contracts regarding dry bulk acquisition and newbuilding commitments, potentially resulting in significant capital expenditure savings.
As part of the agreement, the selling companies will retain the deposits totaling $55m for the four vessels, comprised of a 75,228 dwt Panamax vessel built in 2008, a 75,204 dwt Panamax vessel built in 2007, a 75,000 dwt Panamax vessel under construction in China scheduled to be delivered during the fourth quarter of 2008, and a 75,000 dwt Panamax vessel under construction in China scheduled to be delivered during the first quarter of 2009.
DryShips Inc. has entered into an agreement with the selling companies of these vessels, providing DryShips Inc. with the exclusive option to purchase these four Panamax dry bulk carriers on an en bloc basis at a fixed purchase price of $160m. The exclusive purchase option granted to DryShips Inc. by the Seller will terminate on December 31, 2009. In consideration of the cancellation of the acquisitions and the exclusive purchase option granted to the company, DryShips Inc. has paid to each of the selling companies an additional fee in cash amounting on average to $26.25m per vessel. The agreement was negotiated and approved by a committee consisting of the independent members of the company’s Board of Directors.
In addition, the previously announced sale of the M/V Lacerta a 1994 built 71,862 dwt Panamax drybulk carrier for a price of approximately $55.5m will not close due to the Buyer’s decision to not perform its obligations under the Memorandum of Agreement. DryShips Inc. intends to pursue all legal remedies against the buyer.
DryShips Inc., based in Greece, is an owner and operator of drybulk carriers that operate worldwide. DryShips owns a fleet of 38 drybulk carriers in the water comprising 7 Capesize, 29 Panamax, 2 Supramax and 5 newbuilding drybulk vessels with a combined deadweight tonnage of over 3.4 million tons, 2 ultra deep water semi-submersible drilling rigs and 2 ultra deep water newbuilding drillships.