George Economou’s DryShips Files S-1 ~
A Look Inside
George Economou’s dry bulk shipping IPO, to be called “DryShips”, filed a prospectus today to sell 7.1 million shares at $16-$18 each in an initial public offering with underwriters Cantor Fitzgerald & Co., Hibernia Southcoast Capital, Oppenheimer & Co., Dahlman Rose & Company, and HARRISdirect. A market report from CBS Marketwatch today reported that the price range is actually $14-$16. DryShips plans to pay a 5% dividend and will be listed on the Nasdaq under the ticker symbol “DRYS.”
As is our policy, we will refrain from presenting our valuation of the company intil the transaction is complete, so the following facts have been taken directly from the offering document.
Sources & Uses of IPO Funds
As the accompanying chart illustrates, at the time of the offering DryShips will own five panamax and one capesize vessel. The company also has 11 more dry bulk carriers on subjects for an aggregate cost of $322 million.
The the company states it will use the estimated $111.5 million net proceeds of the offering together with $145 million borrowed under a new $185 million credit facility from Commerzbank and HSH, 1.35 million shares and up to $30 million under another credit facility that it plans to put together to finance the purchase. The company will have $7.0 million in cash immediately prior to the closing of this offering.
According to the document, DryShips will acquire the capesize drybulk carrier Netadola and five panamax drybulk carriers – Paragon, Samsara, Waikiki, Toro, and Iguana – from companies beneficially owned by Mr. Economou’s sister for a total purchase price of $197.8 million with delivery by April 29, 2005. Netadola and the four Panamax drybulk carriers, Paragon, Samsara, Waikiki and Toro, will come in at the same purchase prices as those companies paid when they acquired the vessels from unaffiliated third parties ($164.3 million), and the panamax drybulk carrier Iguana will be acquired at its fair market value ($33.5 million). DryShips will buy the remaining five Identified Vessels directly from unaffiliated third parties at the aggregate purchase price of $119.0 million.
Of Dilution & Dividends
As the chart shows, new investors in DryShips will experience substantial dilution upon consummation of the offering. The reason for this is that, at October 31, 2004, as adjusted for subsequent events, DryShips had negative net tangible book value of $(4.7) million, or $(0.31) per share.
DryShips plans to issue a dividend to pre-offering shareholders of $69 million, comprised of $51.0 million of retained earnings as of October 31st and $18.0 million of earnings of the Initial Fleet for the period between November 1, 2004, and the date of this prospectus. The $69.0 million dividend has been accrued and reflected as a payable in the October 31, 2004 financial statements.
According to the prospectus, “After giving effect to the sale of 8,452,942 shares of common stock at a price of $17.00 per share, which is the mid-point of the expected range of $16.00 to $18.00 per share in this offering, and assuming that the underwriters’ over-allotment option is not exercised, the pro forma net tangible book value at October 31, 2004, would have been $130.1 million or $5.45 per share. This represents an immediate appreciation in net tangible book value of $5.76 per share to existing shareholders and an immediate dilution of net tangible book value of $11.55 per share to new investors.”
Strategy
DryShips intends to employ the vessels in the spot charter market, under period time charters and in drybulk carrier pools. The ships will be managed by Cardiff, which is under common control with DryShips. DryShips plans to grow its fleet through the acquisition of 10-20 year old capesize, panamax, handymax and handysize vessels.
George Economou‘s dry bulk shipping IPO, to be called “DryShips”, filed a prospectus today to sell 7.1 million shares at $16-$18 each in an initial public offering with underwriters Cantor Fitzgerald & Co., Hibernia Southcoast Capital, Oppenheimer & Co., Dahlman Rose & Company, and HARRISdirect. A market report from CBS Marketwatch today reported that the price range is actually $14-$16. DryShips plans to pay a 5% dividend and will be listed on the Nasdaq under the ticker symbol “DRYS.”
As is our policy, we will refrain from presenting our valuation of the company intil the transaction is complete, so the following facts have been taken directly from the offering document.
Sources & Uses of IPO Funds
As the accompanying chart illustrates, at the time of the offering DryShips will own five panamax and one capesize vessel. The company also has 11 more dry bulk carriers on subjects for an aggregate cost of $322 million.
The the company states it will use the estimated $111.5 million net proceeds of the offering together with $145 million borrowed under a new $185 million credit facility from Commerzbank and HSH, 1.35 million shares and up to $30 million under another credit facility that it plans to put together to finance the purchase. The company will have $7.0 million in cash immediately prior to the closing of this offering.
According to the document, DryShips will acquire the capesize drybulk carrier Netadola and five panamax drybulk carriers – Paragon, Samsara, Waikiki, Toro, and Iguana – from companies beneficially owned by Mr. Economou‘s sister for a total purchase price of $197.8 million with delivery by April 29, 2005. Netadola and the four Panamax drybulk carriers, Paragon, Samsara, Waikiki and Toro, will come in at the same purchase prices as those companies paid when they acquired the vessels from unaffiliated third parties ($164.3 million), and the panamax drybulk carrier Iguana will be acquired at its fair market value ($33.5 million). DryShips will buy the remaining five Identified Vessels directly from unaffiliated third parties at the aggregate purchase price of $119.0 million.
Of Dilution & Dividends
As the chart shows, new investors in DryShips will experience substantial dilution upon consummation of the offering. The reason for this is that, at October 31, 2004, as adjusted for subsequent events, DryShips had negative net tangible book value of $(4.7) million, or $(0.31) per share.
DryShips plans to issue a dividend to pre-offering shareholders of $69 million, comprised of $51.0 million of retained earnings as of October 31st and $18.0 million of earnings of the Initial Fleet for the period between November 1, 2004, and the date of this prospectus. The $69.0 million dividend has been accrued and reflected as a payable in the October 31, 2004 financial statements.
According to the prospectus, “After giving effect to the sale of 8,452,942 shares of common stock at a price of $17.00 per share, which is the mid-point of the expected range of $16.00 to $18.00 per share in this offering, and assuming that the underwriters’ over-allotment option is not exercised, the pro forma net tangible book value at October 31, 2004, would have been $130.1 million or $5.45 per share. This represents an immediate appreciation in net tangible book value of $5.76 per share to existing shareholders and an immediate dilution of net tangible book value of $11.55 per share to new investors.”
Strategy
DryShips intends to employ the vessels in the spot charter market, under period time charters and in drybulk carrier pools. The ships will be managed by Cardiff, which is under common control with DryShips. DryShips plans to grow its fleet through the acquisition of 10-20 year old capesize, panamax, handymax and handysize vessels.
Written by:
carisk | Categories:
Equity,
Freshly Minted | January 13th, 2005 |
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It’s been a very good year for shipping bankers, at least so far. As you can see from the Dealogic tables below, 36 broadly syndicated deals were closed in the first half of the year, with $6 billion in fresh financing raised.
Average syndicated loan size of $166 million is almost exactly on par with our multi-year average. Of course you won’t see some of the powerhouse names on this list, like Royal Bank of Scotland and the various German banks that control no less than 50% of all shipping debt. That’s because those institutions tend to do more bilateral lending and may not even report the syndicated deals that they are involved with.
Bear in mind, too, that some of the biggest deals of 2003 were not concluded before June 30, 2003. For example, on July 2, 2003 Malaysia International Shipping Corp (MISC), closed a bridge loan with an 8-bank syndicate to fund the $1.1 billion acquisition of American Eagle Tankers Ltd from Neptune Orient Lines. Banks included in that 35 basis point deal were Barclays Capital, HSBC, Citibank, Bank of Tokyo-Mitsubishi, DBS Bank, and BumiputraCommerce Bank, which will also receive credit in the third quarter. Worldwide’s massive $1.3 billion term underwriting is in the works now and will give the second half numbers a lift.
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Written by:
carisk | Categories:
Uncategorized | September 1st, 2003 |
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