DRYS had 1.56 billion of its own debt in Nov 2014......DRYS diluted the stock about 35% and paid off 200 million......if IPO's tankers will remove 280 million more off books....that's 480 million dollars of debt removed so far
DRYS will also own 80% of Tanker IPO'd company possible dividends and loan collateral against any covenant breaches we may encounter until rates recover in shipping
If ORIG rebounds to over 14 per share DRYS will do a MLP and get about 200 million which GE wants to pay off AMB's loan of 200 million and then can convert 8.8 million shares of ORIG to remove the 120 million dollar loan with them....they will retire the stock and DRYS will have 70 million shares left and a 53% controlling interests still
So another 320 million of debt can come off this year.......So 480 plus 320 =800 million of removed debt in one years time.
I. 56 billion minus800 million = 760 million
so in 1 year DRYS can have an 80% ownership in TNAKERS and a 53% ownership in ORIG with 760 million of debt........ less than 50% of last years debt
If shipping rates recover.....GE will be a Star and a Hero on Wall Street.
Come on RATES!!!!!!!!!
The Oil tanker market is near its top
DRYS IPO's the Tankers.....keeps 80% ownership.....removes 279 million of costly debt.....receives a new dividend.
DRYS gets new collateral to use if need be to keep its loan covenants in check.
AS was complained about in Trade winds.....ships being bought from related parties at a premium....should red hot big earning assets be bought at a discount???????? Common now...of corse at a premium.
If in a year or two oil tankers cool off as we all know they will.......off our books....no debt...no depreciation...no covenants.
Of corse GE should IPO Oil Tankers right here at the high..........
Oil should rebound this year a little and more next year and ORIG should be fine.....hopefully the dividend will stand through the next couple of years and share price will rebound.
Just my opinion
and as for Trade Wins says 2200 per day fee to run oil ships......that will not be on DRYS expense sheet either
You can spin anything any way you want
Oil Tanker on fire and will give a gangbuster IPO
ORIG will be back to full strength by Summer/Fall
If DRY bulk rate pick up this year we have a hit on all three segments
So if DRYS was worth 5 to 6 before 37% dilution then 5.5 x .63 = 3.46 per share
So all we need is a little improvement in shipping and we have at least a 3.50 per share company
You would have seen that the only thing keeping oil low today and for a month or two more is everyone with an established well is draining it out at double speed just to make the bills at present.
Very soon a good percentage of these wells will be tapped out and since 40% of new projects have already been scrapped there will be quite a void in production by summer.
We only have a I to 1 1/2 million surplus currently....we will soon have a 4 to 5 million barrel shortfall.
Prices will most likely be in 70's this year and higher 2016 and higher 2017.....ORIG will be fine and working for years to come.
This is a blip on the radar screen......when ORIG gets back to 18 to 20 per share DRYS will be well capitalized again....and by then DRYS will own 80% of and OIL deliver IPO co as well....more loan collateral.
If shipping rebounds this year DRYS will be in a very healthy position
I just hope GE does it at the peak instead of at the bottom as is his track record
common GE move you #$%$ this time
the only positives are
any spot players with older ships are done.....only scrapping left
a large proportion of orders for new ships will be cancelled or put on hold
if we have a demand increase as is predicted in 15 with Europe, China, India, extra all wanting to re-ingnite growth the supply of ships will finally be in correct supply for profits again
so we need a little demand next
ORIG seems OK and Tanker are OK...if ships start to bring in some bacon we can see a blue sky for DRYS again
if we remove 279 million of debt off the DRYS balance sheet and less interest expense....plus a dividend for 80% ownership...if this is close to what DRYS makes on the 10 oil ships now its net net a positive.
DRYS can collateralize the 80% for its outstanding loans if need be and when a year from now a kazillion oil ships hit the market and rates tank.....with a little luck that year will buy ORIG its recovery time needed and DRYS shipping rates may stable-ize higher.
This could buy DRYS the year to year and a half it will need. Less debt is good!!!! and who knows maybe the 80% ownership will actually do well much longer than thought. ORIG did a lot to save DRYS over the past 2 years and remember how the pros hated the whole ORIG idea?????
Even if DRYS sold all ORIG shares at a stupid discount of 8 bucks with 78.5 million shares...they would have 628 million dollars and could ride out a 4 year storm if need be
but this is what is going to happen.
in a few months when oil jumps back into the high 60' to mid 70's with another increase coming for 2016 and ORIG shares come back over 14.....DRYS will MLP and get 200 million and pay off the 200 million loan ...then they will convert 8.8 million shares of ORIG back to the Co and remove the 120 million dollar loan.
They will IPO Oil ships and remove 280 million of debt. They will keep a 80 % ownership in the oil Co.
200 million paid off in Dec, 14 from stock liquidation....+ 200 million on MLP + 120 million on convert of ORIG stock + 280 million debt removal on IPO = 800 million removed off books. A 49 % ownership in ORIG ( their debt now off books ) and a 80% ownership in Oil co.
So 1.6 billion debt - 800 million = 800 million in debt a shipping co ,a 49 % ownership of ORIG and 80% of the oil CO.
If shipping picks up a little with 800 million less in debt DRYS can make money DRY Bulking again plus owner ship interests in other co's
A good move is a good move regardless of where DRYS is heading
and my cost basis is 3.40 sadly enough not 6.00
I still think this will be a positive and may prevent a further dilution in Dec 15 with ABN may accept some shares in Tanker IPO for a 1 yr extension
Give shipping rates some time to euualize
Audio we are all frayed with DRYS...no need for name calling
by summer oil will be rising in price.....older rigs are being shut down and scrapped heavily....when the price of oil is back to over 70 this year and over 80 next year.....there will be 50% less fracking and 30 % less older water drilling rigs available....
ORIG will shine again and in just a few months this will become evident