DryShips (DRYS) Continues to Fall on Announcement of New Equity Raise

Joel Anderson |

Greek shipping company DryShips, Inc. (DRYS) continued to fall on Wednesday after announcing Monday that it would be selling $200 million in new shares. The company’s shares were down almost 4 percent Wednesday, marking a nearly 13 percent decline since the announcement of the new equity sale. Shares traded as low as $3.15 apiece, marking a 21.25 percent decline from the 52-week high the company reached on September 25.

New Shares Offered

DryShips equity offering is significant given the company’s current market cap of just over $1.5 billion. The company’s sales agent for the move will be Evercore Group LLC (EVR) , and the intent is to raise money sufficient to pay funding needs expected to be $150 million through 2014.

However, this may be a sign of optimism for the company’s management. In a conference call on August 8, CEO George Economou had reported that the company would need $30 million for 2013, down from an estimated $100 million, and $200 million for 2014. Now, DryShips appears to have revised their estimated cash needs through 2014 downward another $80 million, possibly indicating stronger-than-expected fundamentals.

A Rising Tide…

DryShips has been experiencing an excellent start of fall, bouncing over 70 percent since August 1 after a stagnant year. The company reached its 52-week low in early January after it paid $21.4 million in cash to divest itself from two unfinished Suezmax tankers. Shares have more than doubled in value since then.

The Baltic Dry Index, which assesses the price of moving dry goods by sea, has doubled since the start of August. Driving much of this increase has been increased demand for iron ore and coal in Japan and China as well as improving iron ore export volume from Brazil and Australia, a combination that’s generally good for shippers. Also driving some improvements are modest improvements in macroeconomic factors in the United States.

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Companies

Symbol Name Price Change % Volume
DRYS DryShips Inc. 4.65 -0.60 -11.43 8,501,854
EVR Evercore Partners Inc Class A 68.45 -1.80 -2.56 165,967
LPAD Lapolla Industries Inc 0.48 0.00 0.00 0

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