George Economou, DryShips chairman and CEO, said: “Our liquidity position has been positively impacted by the outperforming tanker markets, especially the Suezmax and Aframax segments, which are performing above expectations for this time of the year. The drybulk carrier segment had a weak second quarter of 2014, but we believe that the pace of newbuilding deliveries is tapering off and when combined with continuing robust demand, will lead to a sustainable recovery in charter rates.
“Clearly our view is supported by forward charter rates and asset prices, which are holding up resiliently, underscoring the positive market expectations. Dryships has predominantly spot market exposure and is therefore uniquely positioned to take full advantage of the expected recovery in charter rates.
“We are delighted to have received firm commitments for a total of up to $520 mill from ABN AMRO and Nordea Bank, which is a testament of the company’s strong and long lasting relationship with commercial lenders and a clear sign of the support DryShips is enjoying from the banking industry. This is the first major milestone towards the refinancing of the 5% convertible notes maturing in December and we continue to pursue various alternatives for the remainder of the balance.
“Turning to our offshore drilling interests, Ocean Rig continues to execute on its business plan. Ocean Rig’s modern fleet, strong balance sheet and solid contract backlog, provides it with the foundation to implement its previously announced value creation initiatives which will also have a direct benefit to its shareholders including Dryships.”
For the tanker segment, net voyage revenues amounted to $14.2 mill for 2Q14, compared to $9.1 mill for the same period in 2013.
The TCE, rate for the tanker fleet was $15,650 per day per vessel in 2Q14, which was a significant improvement compared to the $10,004 per day per vessel TCE rate in the corresponding period of 2013.
Subsequently, on 18th July, 2014, the company signed a firm commitment letter from Nordea Bank for an up to $170 mill senior secured credit facility to finance nine drybulk vessels. Nordea Bank has committed to fully underwrite this facility, which is expected to have a five year term and bears interest at LIBOR plus a margin.
Six out of the nine vessels are currently mortgaged under the company’s $325 mill senior credit facility, which had a balance of $58.1 mill as of 31st July, 2014. The remaining three vessels are currently debt free. The availability of this facility is subject to final documentation and certain conditions precedent.
On 16th July, 2014, the company received a firm commitment letter for an up to $350 mill secured bridge loan facility, to partially refinance its 5% convertible bond maturing 1st December, 2014. ABN AMRO Bank is expected to be the lead arranger and commit $200 mill in this facility.
The facility is subject to definitive documentation. DryShips said that it expected it will be secured by Ocean Rig shares owned by the company, will contain certain conditions precedent, will mature 12 months from the drawdown date, or such period as may be extended by the lenders for up to 12 months and will be subject to mandatory prepayment in certain events.
During 2Q14, the company did not resume sales under its previously announced $200 mill programme of at the market issuances of its common shares. To date the company has sold 29,102,077 common shares pursuant to the at-the-market offering, resulting in net proceeds of $113.7 mill, after deducting commissions.