Dryships: Partial Spin-Off of Ocean Rig UDW
DryShips Inc. (NASDAQ: DRYS) announced that its Board of Directors has approved the partial spin-off of its interest in the Company’s majority-owned subsidiary Ocean Rig UDW Inc., of which DryShips currently owns approximately 78% of the issued and outstanding common stock.
DryShips will distribute approximately 2,967,359 shares of common stock of Ocean Rig UDW Inc., which will reduce DryShips’ ownership interest in Ocean Rig UDW by approximately 2%. The number of shares of common stock of Ocean Rig UDW to be distributed for each share of common
stock of DryShips will be determined by dividing 2,967,359 by the aggregate number of issued and outstanding shares of common stock of DryShips on September 21, 2011, the record date for the distribution. As of August 4, 2011, DryShips had outstanding 399,151,783 common shares, which would have resulted in the distribution of 0.007434 shares of common stock of Ocean Rig UDW for every one (1) share of common stock of DryShips. Fractional shares of Ocean Rig UDW common stock will not be distributed to DryShips’ shareholders. Instead, fractional shares of Ocean Rig UDW will be aggregated and sold in the open market, with the net proceeds distributed pro rata in the form of cash payments to DryShips’ shareholders who would otherwise be entitled to receive a fractional share of Ocean Rig UDW common stock.
No action or payment is required by DryShips’ shareholders to receive shares of Ocean Rig UDW common stock. An Information Statement containing details regarding the distribution of the Ocean Rig UDW common stock will be mailed to DryShips’ shareholders prior to the distribution date. Investors are encouraged to consult with their financial advisers regarding the specific implications of
buying or selling DryShips common stock on or after the ex-dividend date.
Pursuant to the indenture governing the Company’s $700.0 million aggregate principal amount of 5% Convertible Senior Notes due December 1, 2014 (the “Convertible Senior Notes”), the distribution of shares of Ocean Rig UDW common stock will result in a downward adjustment of the onversion price at which each $1,000 aggregate principal amount of Convertible Senior Notes may be converted into shares of common stock of the Company. The new conversion price will be effective as of the ex-dividend date of the distribution of shares of Ocean Rig UDW common stock nd will be provided to noteholders as soon as it can be determined under the provisions of the indenture. The distribution of shares of Ocean Rig UDW common stock does not provide noteholders the right to convert the Convertible Senior Notes.
Ocean Rig UDW has applied to list its common stock on the Nasdaq Global Select Market. Ocean Rig UDW common stock is expected to begin trading on a “when-issued” basis on the Nasdaq Global Select Market beginning in mid September 2011. Ocean Rig UDW common stock is expected to begin “regular-way” trading in October 2011 under the symbol “ORIG”.
George Economou, Chairman and Chief Executive Officer of the Company commented: We are pleased to announce the partial spin off of Ocean Rig UDW to our shareholders. The investment decision that was taken in 2007 to diversify into the ultra deepwater drilling sector is set to be a
profitable venture that we believe will deliver substantial value to DryShips shareholders. We believe that the intrinsic value of Ocean Rig is substantially higher than what has been used to determine the number of shares that will be distributed, thereby implying a much higher dollar value to the shareholders than the $50 million headline number. This dividend is the first step in delivering value to our shareholders from the Ocean Rig investment and we are considering further alternatives including regular dividends and stock buybacks.