DryShips shares sail high as rig financing arrives, finally

BANGALORE, March 31 Thu Mar 31, 2011 1:25pm BST

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BANGALORE, March 31 (Reuters) - DryShips Inc shares inched up on Thursday, a day after the Greek dry bulk carrier and oil and gas driller said it has finally secured financing for all of its four new drillships.

After several delays, DryShips said it has received commitments for a new $800 million loan and restructured its $1.1 billion term loan facility from Deutsche Bank.

"The new financing arrangements are a step in the right direction, as they remove one of the remaining hurdles for DryShips as it works toward the full spin-off of Ocean Rig and eventual public listing," Wells Fargo Securities analyst Michael Webber said.

Two of the drillships are likely to be delivered this year and DryShips, which recently forayed into the business of transporting oil [ID:nSGE6BM0C2], said the much anticipated spin off of its drilling division, Ocean Rig, will happen at the earliest and that of the tanker business at the "right time".

"We remain committed to registering the Ocean Rig shares on an exchange at the earliest and to build it into a competitive player in the ultra deepwater sector," said Chief Executive George Economou, an MIT alumnus with three decades of maritime sector experience.

DryShips said that three out of its 38 drybulk carriers are chartered to Korea Line (KLC) , a major South Korean vessel charterer that had to file for receivership in January. [ID:nLDE70O0LN]

"While all three vessels are trading in the spot market, we estimate the lost revenues from these charter defaults at roughly $30-35 million in 2011," Credit Suisse analyst Gregory Lewis said.

The company's stock, which recently completed six years of its Nasdaq listing, was trading 17 cents higher at $5.10 before the bell. The stock has fallen 10 percent year to date.

Economou, a shipping magnate, added "we remain committed to placing the company's tanker interests in a standalone entity at the right time."

As a hedge against the vessel oversupply-led softness in the freight market, DryShips had placed over 80 percent of its 2011 ship days fixed at about $33,800. Panamax vessels, which usually transport 60,000-70,000 tonne cargoes of coal or grains, earned about $16,173 on an average on Wednesday. [ID:nLDE72T25T]

But despite that, revenue from the dry bulk segment fell 5 percent as fleet utilization inched lower to 98.1 percent from 98.5 percent, offsetting the 33 percent rise from the drilling business.

The company on Wednesday reported higher fourth-quarter profit as renewed rig contracts boosted profits.

October-December adjusted profit came in at 24 cents a share, short of 26 cents Wall Street analysts were expecting. [ID:nASA01ULQ][ID:nN30207355] (Reporting by Krishna Das in Bangalore; Editing by Maju Samuel)

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