More cash for DRYS. The FMV for the 4 VLGC is approximately $175 Million with aggregate Earnings Backlog of $300 Million under fixed rate time charter till 2028. Hence, in the sale of these vessels a premium to carrying value should be obtained for the future earnings plus getting rid of the old Panamex before regulatory compliance for these vessels take effect, while modernizing the fleet is a good idea.
This sale should provide over $200 Million in extra cash for DRYS to acquire newer vessels for dry bulk shipping and to repurchase shares.
Why dry bulk? Dry bulk shipping rates are getting higher as attested by the BDI upward trajectory. Dry bulkers are expected to account for 5.2 Billion Tons (40%) of all seaborne trade in 2018. Despite the trade spat, there no slowing down of Chinese demand for raw materials in its growing economy. In fact, vessel port congestion due to a spat may actually help become a driver for rates on the supply side easing overcapacity. DRYS seem to be well positioned for this run up.
Also, there is nothing unusual about acquiring assets via privately owned companies (SPII, Sierra, Mountain) in the shipping industry or has it pertains to DRYS.
