Why does GE continue to pour good money after bad ?
If it's taken for granted that George is a shrewd, maybe even ruthless (when it comes to his shareholders' interest) CEO then why does he continue to prop up this failing company by drawing down his stake in his profitable drilling subsidiary?
Why not just abadoned DRYS and let it go bankrupt?
Does George really believe DRYS is worth saving, that it has a profitable future once the dry bulk sector turns around (as it presumably will in the not to distant future)?
Is his own expertise in the industry so flawed that he isn't able to make a good business decision about the fate of DRYS?
GE and his sister make a lot of money thru Cardiff charging fees to DRYS. If GE lets DRYS go BK who is to say the banks wont go after those ORIG shares that DRYS owns. GE dumped Tankers and OCNF on shareholders and now he and all shareholders are paying for it with the selling down of ORIG. GE's sins are costing him and you can bet he isn't happy about it. By the time the market turns you can bet GE will have had to sell more ORIG shares. The master plan was get ORIG to a market cap of 4 billion and with 85% ownership GE could have put a lot of money into his DRYS's after selling all of ORIG shares, now GE is down to 59.4% of his original master plan which is another 250 million DRYS will never see........
As the owner of the business that gets paid the most from DRYS he needs it to keep paying the bills. Cardiff gets paid for every ship every day. It's a sweet deal for George. He gets paid whether or not DRYS makes a penny. If DRYS failed and the banks snagged the ships, he'd lose the management deal. And the many way he makes money from DRYS are numerous and creative well beyond the technical management of the vessels. Commissions on buying and selling vessels. Commissions on insurance. Commissions on financing. Fees for managing the building of the vessels. Salary. Bonuses. Rent.
And if you read the deal on the 2 newbuild tankers he got rid of on Jan 14 2012.. He doesn't say how much of Drys money had already been paid to shipbuilders toward the cost of building them?? Not only did that money go down the drain!! He paid anouther $21M to someone for taking them!!! He doesn't say that $21M was cancellation charges??? But as usual he didn't divuldge who he sold them to... Hell of a deal for someone!!! That $21M may have been about all the money needed to finish building them... Wonder if Cardiff, Geo"s sister or nephew now own those 2 tankers????