DryShips Inc (fka DRYS)

[TheMotivatedTrader]

$DRYS High hopes for Tankships

http://www.tradewindsnews.com/tankers/353134/High-hopes-for-Tankships

Tankships Investment Holdings only has ten ships to its name but a growing number of forecasters believe the tally will increase significantly in the months to come.

The DryShips spin-off plans to purchase three more tankers with proceeds from an initial public offering (IPO) in New York but some think this transaction will be the first of many.

In a note to clients Erik Nikolai Stavseth, an equity analyst at Arctic Securities, argued that the acquisition will mark the beginning of a broader expansion initiative.

“The key focus on Tankships is in our view the long list of additional vessels that could end up in the company,” the forecaster said.

Stavseth noted that, in addition to the suezmaxes it intends to acquire from affiliates of chief executive George Economou upon completion of a fundraiser that could top $100m, the owner has options to purchase 17 more.

“If Tankships were to do so, the equity requirement will be closer to $450m assuming a conservative 45% leverage,” the analyst continued.

“Moreover, with Ocean Rig (ORIG) rumoured to be working to convert [one or two] drillships into a series of aframaxes (4+2) and suezmaxes (2+2) – we would not be surprised to see these vessels (if realized) also ending up in Tankships.

“Adding the full total of ten vessels would lead to a further increase in equity requirement of $275m, depending on the price of ORIG vessels.

“As such, we argue the Tankships fleet could end up being not only 13 vessels, but closer to 40 vessels in a high case with a total equity requirement of $700m.”