DryShips shares sink on offering, downgrade

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Saturday, 09 May 2009

Shares of DryShips Inc. sank Friday after the Greek drybulk shipper announced a new equity offering that the company acknowledged might dilute its stock price, and an analyst downgraded it to a "Hold ."
DryShips shares lost $1.80, or 18.1 percent, to $8.22 in afternoon trading.
The company said in a Securities and Exchange Commission filing that it has entered into an agreement for the sale of up to $475 million of its common shares. The news follows previous equity offerings announced by the company in recent months.
As part of the latest offering, the company may offer and sell common shares at any time at market prices prevailing at the time of sale, or at negotiated prices.
DryShips said in the filing that investors may experience significant dilution as a result of this offering.
Based on Thursday's closing price of $10.04, the offering would be for roughly 4.7 million shares. As of March 31, DryShips had approximately 109 million shares outstanding, according to a filing with the SEC.
Jefferies & Co. analyst Douglas J. Mavrinac said in a research note Friday that the news isn't good for the company's stock.
"After three dilutive equity offerings over the past six months, we believe DryShips shares have little upside from current levels as the anticipated issuance of approximately 190 million shares over the past six months has essentially removed any upside potential DryShips shares once enjoyed," he wrote.
Mavrinac cut his rating to a "Hold" from "Buy," and reduced his price target to $9 from $12. That price target implies downside of 10.4 percent from the stock's closing price Thursday.
Last week, DryShips, which provides marine transportation services for drybulk cargoes and offshore oil deep water drilling, posted a first-quarter loss driven by a one-time charge of $166.2 million related to contract termination fees and forfeiture of vessel deposits.
It reported a loss of $101.8 million, or 93 cents per share, compared with earnings of $176.3 million, or $4.58 per share, during the same period last year.
Source: Associated Press