dryships

[Jakensama]

The dry market is funky right now. It's had a mini bounce back after the chinese new years but all is not well. Several big dry shippers are collapsing and when that happens they give their ships back to owners who in term loose that revenue stream to support ships they have on charter so it is something like a domino effect. I would stay away from shipping stocks till at least Q3 this year.

Dryships is a crap shoot, it might shoot up really high again and if a bad string of market luck hits their ships they could go belly up. I'll be sure to post anything I see that may indicate an upswing if I see market news that will affect it early.

Below article from one of my ultra secret shipping newspapers explains some of the activity in dryships this week:

Spin-off unspun?
DryShips' deal with Nordea Bank Finland for waivers of breached loan covenants is likely to stand in the way of plans to spin-off offshore assets, at least for now, a New York analyst says.

The Nasdaq-listed bulker and drilling unit owner revealed earlier Monday that it received the waiver on $800m in loans to fund the company's takeover of driller Ocean Rig. (Click here to read TradeWinds' report on the waiver.)


DryShips chief executive George Economou Cantor Fitzgerald analyst Natasha Boyden says the most important development of the waiver is the requirement that Nordea consent to capital expenses, particularly two of four drillships ordered at Samsung Heavy Industries.
"This restriction will apply until the facility has been repaid to below $375 million and, in our opinion, will essentially prevent the spin-off of the drillships segment over the near-term," Boyden said in a note to clients.

DryShip's chief executive George Economou has said that the company plans to spin-off its drillships and ultra-deepwater drilling rigs through a dividend in stock in a new company, Primelead.

The drillships impacted by the waiver deal are the 57,800-gt pair Economou's private Cardiff Marine ordered and then sold to DryShips in October.

DryShips has already warned that it may not close the deal for the duo if the Primelead spin-off does not take place.

Following the waiver announcement, Boyden also cut her 2009 earnings estimate for the company from $1.23 per share to $1.13.

She blamed the cut on the increased interest expenses as a result of the waivers, as well as the sale of the 73,000-dwt Toro (built 1995), which suffered a price reduction from $63.4m to $36m.

In addition to the drillship order, DryShips owns 43 bulkers and two drilling rigs, and it has orders for five bulkers. After the waiver announcement, the Athens-based company's shares gained 4.4% Monday to hit $6.45 in mid-afternoon trading.