DryShips entered a private direct sale of $20m in newly issued preferred shares and warrants to a private firm registered in British Virgin Islands, the company said in a press release.
The company, which has been in the news of late due to a 1500% rise in its stock price, also issued a statement that it “is not aware of any other news that would result in the increased trading activity of its stock or a fluctuation of its stock price.”
In early trading, DryShips have fallen 67% from yesterday’s close, with the price currently hovering at $24 per share.
The George Economou-led panamax and offshore vessel owner said it entered the private sale with Kalani Investments. The firm will sell 20,000 of convertible preferred shares, warrants to purchase another 80,000 of those shares, prepaid warrants to purchase 372,874 common shares and 100 common shares to Kalani.
DryShips said it may receive another $80m if all of the preferred warrants are exercised. The cash will be used for any number of corporate purposes, including repaying the revolving credit facility Economou himself has offered DryShips through his Sifnos Shareholders entity. The company has no present agreement to do so.
The convertible preferred shares are to be converted into common shares at any time at a fixed conversion price of $30 per share. Should DryShips shares drop below that level, the shares will be converted at the higher of either a volume weighted average price prior to the conversion with a floor price at $1.50 per share.
Existing shareholders may face further dilution in the event of the conversion of the preferred shares and warrants. DryShips, which has about 1.1 million shares outstanding now, will have to issue 3.6 million shares if the preferred shares at converted at $30 per share and up to 72 million shares if converted at the $1.50 floor price.
