DryShips Inc. (NASDAQ:DRYS) announced that it has entered into agreements with a first class Korean shipyard to purchase twelve high specification newbuilding tankers at a total purchase price of about $770 million, including over $3 million per vessel in extra items.
The deliveries of the vessels are scheduled as follows:
- Six newbuilding Aframax tankers with following deliveries: four in 2011 and two in 2012
- Six newbuilding Suezmax tankers with following deliveries: one in 2011, two in 2012 and three in 2013
The company has made initial payments of about $120 million against these newbuilding contracts from cash on hand. The Company intends to finance the remaining capital commitments, which include delivery installments of about 70% of each vessel’s price, with cash on hand and bank debt. The Company intends to position its tanker investments for a spinoff or initial public offering.
Mr. George Economou, Chairman and CEO of DryShips Inc., said:
“We are pleased to announce the acquisition of 12 high specification newbuilding tankers from a first class Korean shipyard. With OceanRig UDW’s successful Norwegian offering, we have positioned OceanRig UDW to be a pure play in the ultra deepwater drilling sector with contracts and a balance sheet that is self-sustaining. We intend to take further steps to enhance OceanRig UDW’s status as a pure deepwater drilling participant. In addition, our Board has decided that it is time to refocus on the shipping markets where we see opportunities developing for both the drybulk and tanker sector. While the tanker market is currently experiencing low freight rates, we believe that in the medium to long term strong oil demand growth as a result of the urbanization underway in China and India will lead to substantially improved market conditions. The staggered deliveries for our newbuildings over the next three years will allow us to take advantage of an improvement in market conditions over the next one to two years. We intend to make our tankers a standalone entity during 2011.
“We are positioning the Company to be a significant player in the tanker market with a sizable fleet and a balance sheet that can withstand the cyclicality of the tanker market. DryShips has proven that we can make investments that add shareholder value in the long-term by leveraging our position in the market and the relationships we have built over the long-term with customers, shipyards, investors and banks. Our technical manager currently manages a fleet of tankers and has a long history in the sector.
“DryShips has evolved over the last three years as a company that can leverage its brand name in the industry to develop businesses and position them to operate as standalone public companies. The tanker acquisition and eventual spin off or public offering is the next step in the evolution of the Company. We believe that 2011 will be a critical year for DryShips as we leverage the platform built over the last few years to enhance shareholder value.”