Dryships to Acquire Rest of Drilling Rig Unit
DryShips Inc. (NASDAQ:DRYS) a global provider of marine transportation services for drybulk cargoes and off-shore contract drilling services, announced that it has entered into an agreement to acquire the remaining 25% of the total issued and outstanding capital stock of Primelead Shareholders Inc.
Upon closing of this transaction, Primelead will become a wholly-owned subsidiary of the company. Primelead’s principal assets include two owned and operational ultra deepwater semisubmersible drilling rigs, the Eirik Raude and the Leiv Eiriksson, and four newbuilding drillship contracts for Hulls 1837, 1838, 1865 and 1866. 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.
The consideration to be paid for the 25% interest in Primelead consists of a one-time $50m cash payment on closing of the transaction, and the issuance of $280m face value of convertible preferred stock. The preferred stock, which carries voting rights, 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. The preferred stock will mandatorily convert into common shares of DryShips in four equal increments that correspond to the contractual delivery of the four newbuilding drillships. The preferred stock bears a 6.75% per annum cumulative dividend payable in additional shares of preferred stock. The preferred stock can also be converted at any time by the holders at 42.9% premium to the established DryShips common share price of $5.36 per share.
The sellers consist of a company controlled by DryShips’ Chairman and Chief Executive Officer, George Economou, and other clients of Cardiff Marine Inc. The transaction was negotiated and approved by the audit committee, which is comprised of our independent directors, acting as a special committee. The audit committee took the appropriate steps necessary to evaluate the transaction and determine its fairness. Evercore Partners acted as advisor to the sellers.