It's been a pretty good year for stocks across most sectors, but that certainly cannot be said for DryShips (NASDAQ:DRYS). The stock was lambasted during the first quarter, losing about 95% of its value, and the second quarter isn't starting any better.
Shares are down another 18% at $1.34 on news that the company intends to issue stock to pay for some more ocean freighters.
The global shipping transportation company struck a deal with Kalani Investments Ltd, in which DryShips can sell Kalani up to $226.4 million of its common stock across a two-year period. Called a "share purchase agreement," Kalani is under no obligation to require stock sales, but must buy when directed by DryShips. As part of the deal, Kalani will be paid $1.5 million in stock as a commitment fee.
DryShips said that it inked an agreement to acquire six vessels for a price of $268.0 million. One of the tankers was built in 2012, two were built in 2014 and three, including two VLGCs (very large gas carriers) are under construction. All the ships will be delivered across 2017.
DryShips has been bulking up its fleet as part of a transformation process launched late in 2016. The Athens, Greece-based company has in the last three months spent about $662 million to buy fourteen vessels with an average age of only two years.
Shares have been a train wreck in the last six months. In January, DRYS executed a 1-for-8 reverse split, which sent shares spiraling. After hitting a 52-week high of $808.28 on November 15, shares have been nearly wiped out. However, for those taking a technical approach, the area of $1.23 held bottom support twice in March. Can it do it again?
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