Greece-based shipping company DryShips, Inc. DRYS announced that it will sell four Suezmax tankers (Vilamoura, Lipari, Petalidi and Bordeira) for an en-bloc sales price of $245 million. The company has inked sales agreements for the purpose (through a subsidiary ) with entities controlled by its CEO George Economou. Shares of DryShips gained more than 4% in afterhours trading following the announcement.
The purchasers of the tankers have agreed to make an upfront payment of 20% ($49 million). The remaining amount is due on delivery of the tankers between Jul 1 and Oct 31, 2015.
Moreover, the company announced a potential deal to sell six Aframax tankers for up to $291 million. However, the deals pertaining to the six tankers will not be effective until an unconditional confirmation from the purchaser latest by Jun 30, 2015.
DryShips expects to generate approximately $125 million in free cash flow as a result of the sale of the four Suezmax tankers. The company intends to utilize the amount to prepay an amount of its bridge loan from ABN Amro. The loan currently has a balance of $185 million. Furthermore, the materialization of the sale of aframaxes would result in the generation of a further $150 million of free cash. The additional amount will help the company to prepay the bridge loan and in general corporate purposes.
Following the decision to sell the tankers to Economou, the company has abandoned its plans of a public spin-off of the above fleet. The company finds the option to sell the tankers more lucrative compared to the spin-off.
Zacks Rank
DryShips carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Teekay Tankers Ltd. TNK, Ardmore Shipping Corporation ASC and Danaos Corporation DAC. All these stocks sport a Zacks Rank#1 (Strong Buy).
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