DryShips Expands Into Gas Carrier Market With Option to Purchase Four VLGCs

George Economou at the opening bell of the NASDAQ on February 3, 2005, in celebration of the IPO.
George Economou at the opening bell of the NASDAQ on February 3, 2005, in celebration of the IPO.

Athens-based drybulk shipowner DryShips announced Friday it has entered into a “zero cost” agreement with companies controlled by its Chairman and CEO George Economou to purchase up to four high-specification Very Large Gas Carriers currently under construction in South Korea.

The deal marks DryShips’ first venture into the gas carrier market.

Each of the four VLGCs are going to be employed on long-term charters to major oil companies and traders, the company said.

The VLGCs are being built at Hyundai Heavy Industries and each will be capable of carrying liquefied petroleum gas (LPG).

Under the agreement, DryShips will have three months to exercise four separate options to purchase the four vessels at a price of $83.5 million per ship. If all four options are exercised, the total purchase price of the VLGC fleet will be $334 million.

DryShips says it will fund the acquisition by using cash on hand, any undrawn funds from a recently-obtained $200 million revolving credit facility, and proceeds from its previously announced issuer-managed equity transaction, which has the potential to raise $200 million over a period of 24 months.

Mr. George Economou, Chairman and Chief Executive Officer commented:

“We are very pleased to have concluded a deal that allows us great flexibility in immediately deploying our available liquidity. We believe in the long-term prospects of the gas carrier market. Having the option to acquire a fleet of four sister ships of very high specifications, ready for delivery in the near term and chartered to major industry players, provides us with a unique opportunity to enter this new segment in a solid footing that can be a stepping stone for further expansion . If the Company elects to exercise any of its options, each acquisition will be highly accretive to the Company’s earnings and will provide visible and stable cash flow at above market rates.”

If acquired, the vessels will be managed by TMS Cardiff Gas, a company that is also controlled by George Economou.

DryShips currently owns a fleet of 13 Panamax drybulk carriers, as well 6 offshore supply vessels, comprising 2 platform supply and 4 oil spill recovery vessels.