), a global diversified marine transporter, has decided to issue
$200 million worth of common equities in an at-the-market
offering. Evercore Group L.L.C. will be the company's sales
agent. Management stated that the primary reason to access the
equity capital market is to partially or fully eliminate the
company's funding needs of an estimate $150 million through
In Jan 2013, DryShips sold two of its unfinished Suezmax
tankers, which were under construction at Samsung Heavy
Industries, South Korea, to a third party buyer. In Dec 2012,
DryShips signed two novation agreements under which the third
party owner will assume all the rights, benefits, liabilities and
obligations of the tankers. However, to divest the tankers,
DryShips paid $21.4 million in cash. The primary reason behind
this divestment is to reduce the annual capital expenditure by a
significant $101 million.
The drybulk shipping industry is going through tough times.
Despite an improving U.S. macroeconomic scenario, the drybulk
shipping industry is worse than what it was about a year or two
ago. The sheer increase in vessels under operation resulted
in intense price competition. The lack of near-term foresight
resulted in increased orders for newbuild ships in several docks.
The glut of ships resulted in severe cut-throat price
competition. Global economic headwinds, slowdown of the Chinese
industrial sector, and fluctuations in oil prices are the other
Meanwhile, the drybulk shipping rates and ship values have
increased in the last month. DryShips believes that this trend
will continue in the near future at least for shippers with an
extensive asset base. DryShips has three types of operations,
namely, drybulk shipping, oil tanker and offshore deepwater
Other Stocks to Consider
DryShips currently has a Zacks Rank #3 (Hold). Other stocks in
the marine transportation industry which are performing well
Paragon Shipping Inc.
Star Bulk Carriers Corp.
Diana Containerships Inc.
). While Paragon and Star Bulk currently carry a Zacks Rank #1
(Strong Buy), Diana has a Zacks Rank #2 (Buy).
DIANA CONTAINER (DCIX): Free Stock Analysis
DRYSHIPS INC (DRYS): Free Stock Analysis
PARAGON SHIPPNG (PRGN): Free Stock Analysis
STAR BULK CARRS (SBLK): Free Stock Analysis
To read this article on Zacks.com click here.