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Sam - want to be real clear on this. The $250 million represent projects where FASC will be providing KDS's to. FASC will get a fraction of that money. Nonetheless, their piece of the pie will be big money for FASC.
Charlie - LOL. news coming likely this week.
E - second that!
Sounds like a short's hopes and dreams. GE is looking out for himself. Picking up cheap shares by swapping the debt and selling them next year at a huge profit sounds very much like him. Moreover, I don't see him killing off his golden goose. DRYS is his favorite money machine.
Come next Monday DRYS will have ~104 million shares OS and a NAV somewhere around $7. The missing piece of the puzzle at the moment (other than any new GE surprises) is guidance on revenues. Nothing has been provided regarding Heidmar and what it brings to the party. The only thing on the record is GE stating $77 million in revenues for next year based on shipping revenues. Heidmar could bring another $12-$15 million in revenues. A 15x ebitda revenue should end up with a pps around $7.
Yep. My dream job is to post on a message board so I can blow smoke up everyone's skirts...
Looking for some news this week.
BF - no assumptions there. I have been tracking their fleet through marine traffic and they are very busy these days.
Spartan - this might help: http://dryships.irwebpage.com/ir_fleet_deployment.html
Rhetorically speaking, don't higher spot rates mean higher revenues for DRYS? I wonder what 3Q and 4Q financials will look like with all of the bulkers DRYS has?
BDI @1470 +21 highest since March 2014
MS - I would agree with most of that scenario. My guess is he helps the pps run up and as he can, sells off 18 - 19 million shares. That way he would still have control and get another $150 - $200 million bank.
MS - My assumption is that Sifnos will swap $100 million in debt for the shares. Basically it will make the balance sheet look better allowing GE to get commercial money in its place. What I also suspect is GE will provide more guidance in October along with the announcement the offering has closed. Both should provide the impetus to move the pps up.
MS - I am actually rooting for Sifnos to have to exercise the backstop. The float will remain low for the next 6 months and allow the pps to move up.
The prior conversation was in reference to any shareholder exercising the rights and purchasing shares. Shares purchased are not locked up. On the other hand though, and as you point out, any shares Sifnos acquires through the backstop are locked up. If it goes that way, and it certainly does seem like it will, the OS will be 104 million, but the float will stay at 31 million. That would appear to be a good thing for shareholders in the short run.
Not sure where you are finding a reference to a lock up period for rights shares. The shares GE received from the Heidmar exchange have a 6 month lock up, but the rights shares don't as far as I have read. Any links would help.
tia
Don't see any reason at the current pps why anyone would exercise the rights.
Terms: Each Right will allow the holder thereof to subscribe for 1.1526 shares of Common Stock at the Subscription Price (the ??Basic Subscription Right??). Holders may oversubscribe up to 100% of their basic subscription.
For example, if a Record holder owned 1,000 shares of Common Stock on the Record, the Record holder would receive 1,000 Rights and would have the right to purchase 1,152 shares of Common Stock (1,152.60 rounded down to the nearest whole number) at the Subscription Price per share (for a total payment of $3,168.00 Basic Subscription) and Oversubscribe for an additional 1,152 shares at Subscription Price of $2.75 per share (for additional total payment of $3,168.00 Oversubscription) if you wish to oversubscribe.
RTS exercised are irrevocable.
BDI up again today @1415. Highest value in 4 years. The index keeps posting higher highs and higher lows. It would seem the world's economy is getting better and shipping right along with it. Once the rights offering is completed, DRYS pps should begin reflecting the higher revenues along with at least NAV.
EH - No doubt GE is biggest risk factor for DRYS shareholders. He clearly doesn't care what the impacts are and plans for his enrichment only. In this case though, I believe everyone's interests are in alignment regardless of who ends up with shares from the rights offering.
BWS - 3Q should be profitable for DRYS. Still a lot of unknowns though. However, all of the spot rates have certainly been higher than previous quarters. The BDI is stair stepping higher and should continue moving higher through the end of the year. So 4Q will likely be pretty good too. The only drag on revenues that I see is the OSVR fleet. All 6 ships are laid up and I don't see them coming back into service any time soon. Only a matter of time before GE steals those. Regardless, DRYS is on a good trajectory for revenue over the next year. Now, if that would only translate into a higher pps...
For what it's worth, the BDI is at nearly a 4 year high.
Spartan - GE gave shareholders back $2.5 million in dividends in 1Q and 2Q. That seemed to be an attempt to move the pps to help Kalani distribute new shares at a higher price. Not sure he will continue with the dividend now. If he did though, it would be somewhere around .04/share (68 million OS with $2.5 million dividend). That probably isn't enough to move the pps needle all that much.
The only thing that seems clear to me at this point is there will be 104 million outstanding on 10/2. Unless the pps moves higher, GE is likely going to own a whole lot more of DRYS. I honestly don't know if that would be good or bad for shareholders. However, another $100 million in assets will help the overall valuation of the company.
GE isn't done buying ships yet. The question that brings to mind is will that be accretive and when? Positive revenue guidance should propel the pps to a much higher level too. Factors like the BDI moving higher (up again today @1398 +13) will push the pps higher.
A lot going on over the next 2 weeks. It will be interesting to see if all of those other factors will move the pps beyond the offering price.
Nothing like painting the tape in pre-market. 100 shares takes it down and 1 share to bring it back up. MM's playing this morning?
Interesting the pps appears to be kept below $2.75. Clearly some shorting going on, but it isn't being done in anticipation of another RS. Given what the NAV per share and expected revenue streams, there would appear to be a lot of upside risk for anyone shorting now. Makes me wonder if this is being done by GE to make sure he gets the shares from rights offering. Also makes me wonder what would happen if the shares were pushed above the offering price and shareholders exercised their rights and took back control of DRYS? Would that be enough to push the pps to NAV and beyond?
TBW - GE has found a really good vehicle to buy and sell his fleet through DRYS and profit on every trade. Someone else (shareholders) has taken on all of the risk of ownership while his several companies profit from managing DRYS fleet. He can get money at will through the equity markets. Not seeing any reason for him to change the model.
BDI +24 @1385
Panamax spot rate $12,224
Capesize spot rate $19,614
I-Man - perhaps this will help:
"The first two newbuildings to be delivered are on five-year charters (each with three one-year extension options) to Shell International Trading and Shipping Company and the second two are on 10-year charters to Clearlake Shipping, a subsidiary of the Guvnor Group."
https://fairplay.ihs.com/commerce/article/4280261/latest-in-long-line-of-dryships-strategies-takes-shape
At this point it seems clear enough that $100 million new assets will be added to DRYS at the start of the month. Will it be GE or others doesn't matter in that regard. Should GE end up with the new 36 million shares, does it really matter and in what way? He already controls the company with his current 53% ownership. Control per se doesn't seem to be an issue at this point.
The next question to ask is will GE do something that would negatively affect the value of his 73 million shares? He is very adept at making money for himself so it would unlikely he would do anything, at least immediately, that would take the pps down.
With those assumptions in mind, my guess is that DRYS will begin getting closer to NAV next month. 2 weeks to go.
Sam - Not that I know of. However, there is more happening in Florida. Don't believe that was slowed any though.
The latest word is that signing final documentation for the Quebec project was postponed a week due to hurricane Harvey. Apparently one of the principals is located in Houston and needed a bit more time. Maybe next week there will be something more definitive.
BDI up today. Panamax over $12k. Haven't seen that rate in a long time.
EH - I don't think I said anything like that. Understanding the short agenda, I can understand why someone would want to broadcast that message though.
From my perspective, who knows where the winds will move the pps day to day? It does not seem likely to move above $2.75 prior to the rights offering ending though. That is, not without some new significant news, which could happen. GE is unpredictable that way. He is on record stating he plans to continue adding ships and building the fleet. Maybe some new announcement will be the reason that drives the pps much higher. Anyone's guess at this point.
One of the biggest problems with DRYS is the rear view mirror approach to analyzing the company. The balance sheet has changed significantly this year and it is essentially an entirely new business. The two quarters that have been reported this year show the trajectory of that change. At this point in time and with the additional $100 million capitalization from the pending rights offering, DRYS will be grossly under leveraged next month. I am sure GE will pay himself back from the revolver and replace it will commercial debt. One question is which business unit will GE add new ships to.
So, at the start of 3Q what will revenues look like? There is no history to fall back to on the ships that have recently been added to the fleet and nothing yet on Heidmar. Unclear at this time what revenues will be only that the gross will certainly be higher. Over the next 2 quarters, however, will revenues produce positive results? All indicators are pointing to very positive results especially by 4Q.
Pick your reasoning, NAV or revenues, and it seems very clear that DRYS is undervalued with 104 million shares outstanding.
EH - there is certainly a good deal of hock pocus getting done by brokerages and MMs. However, I don't see how the addition of 36 million more shares would cause a short squeeze though. At this point, GE will most likely end up with the shares. There isn't any reason to buy shares from the offering that are more expensive than the current pps. That seems to be exactly GEs plan. Assuming he ends up owning nearly 70% of DRYS outstanding, will the be any more or less trading in either direction?
My guess, and it is just that, GE will pay himself back $100 million out of the revolver with the shares. He will then push the pps up next month and off load about 20 million shares. He will stil control DRYS and have another $100+ million cash from the sale of the shares.
Anyone have thoughts on what all of the tiny grads are all about? 1 share trades would have to be a MM given the cost for a retail trade.
Seems unlikely to move much until the offering is completed or expires. DRYS is undervalued here by most any metric. The biggest and ongoing risk is GE.
IMF is expecting 3.4% and 3.6% worldwide GDP growth for 2017 and 2018 respectively. With nearly 2/3 of 2017 gone, Panamax and Capesize growth rate is 1.7% and 1.8% respectively. In short, the supply is slowing while demand is growing.
Shipping rates are a function of supply and demand and all indicators are pointing to higher rates going forward.
Like GE or not, the dry bulk business is improving and DRYS revenue will continue to move forward with rates. The BDI is up 40% so far this year and higher than it was at this time in 2014. DRYS will start the year with 4 contracted VLGCs. The back end of 2017 and all of 2018 should be very good for DRYS.
DRYS doesn't own any of ORIG.
BDI up again today @1355. 3 weeks and the rights offering concludes. glta
E - the more likely scenario is the revolver debt will be reduced by $100 million.