Raising $150m is a good thing. At least we are not boring money and getting further in debt. This action will help cash flow and boost the price to $4 very soon. Shipping is up, Good job CFO.
If DRYS can push into profits...this will be a non-issue. My guess is that by raising some equity capital DRYS can take delivery of the 4 Panamex Newbuilds in 2014...unlike the ships they returned and lost their deposits, these ships are becoming more valuable each day now that daily rates have risen from $4000 to $15500 per day in the last 12 months. They have 22 Pans of which 17 are on the spot market and 5 will coming off charter w/ 30-40% less per day current rates. This is a perfect storm for DRYS with 26 Pans available for 2014 @ $15000 per day rates and most likely 30-50% more average days chartered.
Companies either raise capital by selling shares because they have to, or voluntarily because they are being opportunistic when their stock price is fully valued or over valued.
Raising capital by selling shares is an indication that the company believes the shares are fully valued or over valued. That is the only time a company should voluntarily raise capital by selling shares.
I think strategically it may be a good thing for Dry Ships to sell shares and pay down some debt. But it is unfortunate that they found themselves with such a debt burden that this was necessary.
No doubt it dilutes current share holders and if the stock really is worth $10, for every dollar they are getting now they are really giving up $2.3 dollars of ownership.
I hope this is the end of the dilution, at least until the stock is over $10.
opportunistic yes; overvalued no...therefore, dilution no. read the thing again. 'funding needs' - operations; 'in addition' reduce debt through negotiation; adjust financial covenants - we aren't giving our cash cow ORIG away.