TOPS and DRYS: Similar Dilution Plays
Dilution Causing Trouble At Sea
Greek shipping stocks are notorious for what appears to be never ending dilution; purchase agreements seem to be announced one after another. DryShips Inc. is perhaps the biggest offender when it comes to endless dilution. Examining the monthly chart of Dryships Inc. says it all:
DryShips stock was never worth that much money; those prices are adjusted according to the numerous reverse stock splits that were executed. It is well known that reverse stock splits are initiated when a stock's share-price is low enough to put it in danger of delisting and share-prices usually only go that low when a stock is being heavily diluted (or the company is going bankrupt). DryShips had numerous rounds of dilution for 2 years straight; which completely destroyed the value of many shareholders positions.
Top Ships has been following the same dilution path as DryShips. It has not been confirmed by any sources, but it is evident enough, the patterns are way too similar. Top Ships has been announcing new rounds of dilution through purchase agreements for quite some time now. Top Ships monthly chart paints the same picture as DryShips:
Top Ships stock was never worth that much money; those prices are adjusted according to the numerous reverse stock splits that were executed. It is well known that reverse stock splits are initiated when a stock's share-price is low enough to put it in danger of delisting and share-prices usually only go that low when a stock is being heavily diluted (or the company is going bankrupt). Top Ships had numerous rounds of dilution for almost 2 years straight; which completely destroyed the value of many shareholders positions.
DryShips Inc. Ending of Dilution
These SEC filings were DryShips last attempt at dilution in 2017:
"Exhibit 99.1
DRYSHIPS INC. ANNOUNCES AGREEMENT TO CONDUCT A PRIVATE PLACEMENT AND SUBSEQUENT RIGHTS OFFERING August 11, 2017 , Athens, Greece. DryShips Inc. (NASDAQ:DRYS) ("DryShips" or the "Company"), a diversified owner of ocean going cargo vessels, today announced that the audit committee of the Company's board of directors (the "Audit Committee") has approved a binding term sheet (the "Term Sheet") pursuant to which the Company will sell the Company's common shares to entities affiliated with its Chairman and Chief Executive Officer, Mr. George Economou ("Mr. Economou"), for aggregate consideration of $100 million at a price of $2.75 per share (the "Private Placement").Pursuant to the Term Sheet, the Audit Committee has also approved a subsequent rights offering (the "Rights Offering") that would allow the Company's shareholders to purchase their pro rata portion of up to $100 million of the Company's common shares at a price of $2.75 per share. The Rights Offering will be backstopped in full by Sierra Investments Inc. ("Sierra") , an entity affiliated with Mr. Economou.Mr. Economou will not exercise his subscription rights in the Right Offering outside of the backstop commitment. The Company will have the right to cancel the Rights Offering or amend the terms thereof.The Term Sheet obligates the parties to use their best efforts to negotiate definitive documentation and execute the transactions as soon as practicable.The consideration for the Company's common shares in the Private Placement will be: (i) the acquisition of 100% of the issued and outstanding equity interests of Shipping Pool Investors Inc., which directly holds a 49% interest in Heidmar Holdings LLC, a global tanker operator, from SPII Holdings Inc., an entity affiliated with Mr. Economou; (ii) the termination of the participation rights set forth in the Deed of Participation dated May 23, 2017 by and between the Company and Mountain Investment Inc., an entity affiliated with Mr. Economou; (iii) forfeiture by Sifnos Shareholders Inc., an entity affiliated with Mr. Economou, of all outstanding Series D preferred shares (which carry 100,000 votes per share) of the Company that it currently holds; and (iv) the repayment of $27 million under the Company's unsecured credit facility, as amended (the "Sierra Credit Facility") with Sierra . The Company will not receive any cash proceeds from the Private Placement.The cash proceeds from the Rights Offering are expected to be used for general corporate purposes and/or vessel acquisitions and/or to repay amounts outstanding under the Sierra Credit Facility. The consideration for the Company's common shares issued to Sierra in the Rights Offering as part of the backstop will be the repayment of amounts outstanding under the Sierra Credit Facility. This press release does not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of any securities referred to in this press release in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.The securities offered in the Private Placement will not be registered under the Securities Act of 1933, as amended (the "Securities Act") or the securities laws of any other jurisdiction and may not be offered or sold absent registration or an applicable exemption from registration requirements under the Securities Act and applicable state securities laws.The Rights Offering will only be made by means of a prospectus supplement under the Company's shelf registration statement on Form F-3 meeting the requirements of the Securities Act. The securities may not be sold nor may an offer to buy securities be accepted prior to the prospectus supplement being filed.
Exhibit 99.2
DRYSHIPS INC. ANNOUNCES TERMINATION OF THE COMMON STOCK PURCHASE AGREEMENT WITH KALANI INVESTMENTS LIMITED August 11, 2017 , Athens, Greece. DryShips Inc. (NASDAQ:DRYS) ("DryShips" or the "Company"), a diversified owner of ocean going cargo vessels, announces that in connection with the transactions announced earlier today (the "Proposed Transactions"), (i) it has terminated the common stock purchase agreement, dated April 3, 2017, by and between the Company and Kalani Investments Limited, a company organized and existing under the laws of the British Virgin Islands, effective immediately; (ii) Mr. George Economou, the Company's Chairman and Chief Executive Officer, has agreed, either directly or through his affiliated entities, to refrain from re-selling for a six month period any Company common shares to be acquired by him in the Proposed Transactions; and (iii) the Company has agreed not to conduct any equity offerings until after December 31, 2017, without the prior approval of the majority of its unaffiliated shareholders."
DryShips Inc. Dilution End And Turn-Around
DryShips Inc.'s end of dilution was proven to investors by a very favorable chain of events. The chain of events restored some of the value that DryShips Inc. had lost with years of dilution and the recent earnings report showed positive earnings as well. Here are the most notable chain of events:
Announcement of CEO Owning Majority of Outstanding Shares From Rights Offering:
"Exhibit 99.1
DRYSHIPS INC. ANNOUNCES RESULTS OF RIGHTS OFFERING October 4, 2017 , Athens, Greece. DryShips Inc. (NASDAQ:DRYS) ("DryShips" or the "Company"), a diversified owner of ocean going cargo vessels, today announced the final results of its previously announced rights offering of shares of the Company's common stock, par value $0.01 per share ("Common Stock"), which expired at 5:00 p.m., New York City time, on October 2, 2017. The offering was fully financed and the Company raised $100.0 million of gross proceeds, including a $99.2 million investment by Sierra Investments Inc. ("Sierra"), an entity affiliated with the Company's Chairman and Chief Executive Officer, Mr. George Economou, pursuant to a backstop commitment by Sierra.Rights holders subscribed for an aggregate of 305,760 shares of Common Stock and the Company raised approximately $0.8 million of gross proceeds therefrom, while 36,057,876 shares of Common Stock will be issued to Sierra. Shares of Common Stock will be delivered to subscribers in the rights offering and Sierra on or about October 4, 2017.The cash proceeds from the rights offering are expected to be used for general corporate purposes and/or vessel acquisitions and/or to repay amounts outstanding under the Company's unsecured credit facility, as amended, with Sierra (the "Sierra Credit Facility"). Following the closing of the rights offering, the amount outstanding under the Sierra Credit Facility will be approximately $73.8 million and the facility is expected to be refinanced with a new secured loan facility with Sierra. Additionally, following the closing of the rights offering, the total number of shares of Common Stock outstanding will be 104,274,708 and entities that may be deemed to be affiliated with the Company's Chairman and Chief Executive Officer, Mr. George Economou, will beneficially own approximately 69.5% of the issued and outstanding Common Stock."
Announcement of a Dividend:
"Exhibit 99.1
DRYSHIPS INC. ANNOUNCES DIVIDEND
FOR THE QUARTER ENDED SEPTEMBER 30, 2017
ATHENS, GREECE – October 17, 2017 - DryShips Inc. (NASDAQ: DRYS) (the “Company” or “DryShips”), a diversified owner of ocean going cargo vessels, announced today that, in accordance with its previously announced dividend policy, the Company’s Board of Directors has declared a quarterly cash dividend with respect to the quarter ended September 30, 2017.
With respect to the quarter ended September 30, 2017, the Board of Directors declared a cash dividend of $2.5 million payable on or about November 14, 2017 to common shareholders of record as of October 27, 2017. The dividend per share amount to be paid by the Company, based on the Company’s 104,274,708 common shares outstanding, will be approximately $0.023975 per share."
Announcement of Buy Back and Continued Dividend:
"Exhibit 99.1
DRYSHIPS INC. ANNOUNCES DIVIDEND FOR THE QUARTER ENDED DECEMBER 31, 2017 AND AUTHORIZATION OF AN UP TO $50 MILLION STOCK REPURCHASE PROGRAM February 7, 2018 , Athens, Greece - DryShips Inc. (NASDAQ:DRYS) ("DryShips" or the "Company"), a diversified owner of ocean going cargo vessels, announced today that, in accordance with its previously announced dividend policy, the Company's Board of Directors has declared a quarterly cash dividend with respect to the quarter ended December 31, 2017. With respect to the quarter ended December 31, 2017, the Board of Directors declared a cash dividend of $2.5 million payable on or about March 8, 2018 to common shareholders of record as of February 20, 2018. The dividend per share amount to be paid by the Company, based on the Company's 104,274,708 common shares outstanding, will be approximately 2.4 cents per share. The Company also announced today that its Board of Directors has authorized a stock repurchase program, under which the Company may repurchase up to $50 million of its outstanding common shares for a period of 12 months. DryShips may repurchase shares in privately negotiated or open-market purchases in accordance with applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The specific timing and amount of repurchases, if any, will be at the discretion of the Company's management and will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations. The Company is not obligated under the program to purchase any shares. Due to applicable securities laws, the Company's repurchase of shares will not begin until after the release of the Company's financial statements for the fourth quarter ending December 31, 2017, which is expected to be within February. The repurchase program may be suspended or discontinued at any time. The Company expects to finance the stock purchases with existing cash balances."
What Does DryShips Inc. Dilution Have To Do With Top Ships Inc. Dilution?
DryShips Inc.'s actions have been an emotional roller-coaster for investors. Top Ships Inc.'s actions have been an emotional roller-coaster as well. Investors of Top Ships Inc. have recently been disappointed with their announcement of a new purchase agreement. Top Ships Inc. investors feel as though they have been deceived by the company. If Top Ships Inc. is following in the foot steps of DryShips Inc., then investors will surely be satisfied with the end result. DryShips Inc.'s final dilutive efforts were actually deceiving to those that short stocks during intense dilution. It was essentially a bear-trap that was closed when DryShips Inc. made its dividend and buy back announcements. Many investors believe that this is the route Top Ships Inc. is headed and it seems to be going in that direction. Only time will tell.
Read the full article
