After the market close on Friday, DryShips issued a 6-K updating its issuance of common stock.
Per the 6-K, DryShips issued 67.4 million shares over two weeks at an average price of $1.93. This is a massive discount from the $4.47 closing price on February 17th.
Despite a feeble attempt to boost its stock price by announcing a $10 million/annum common stock dividend on February 27th, DryShips appears determined to issue stock at any price.
DryShips may issue $70 million more of common stock under its Purchase Agreement with Kalani. Based on the $1.37 closing price on Friday, another 70 million shares could be issued.
DryShips Inc (NASDAQ:DRYS) issued a 6-K on Friday March 3rd after the market close providing updated information on the issuance of common stock under its Prospectus Supplement and through a Purchase Agreement with Kalani Investments. This prior article provides additional background on the offering. Here are the salient points needed to assess the offering:
• 67.44 million shares have been issued over 9 trading days at an average price of $1.93/share.
• Shares outstanding as of March 3rd are 103.97 million (i.e. shares outstanding increased 185%).
• Shares traded during the 9 day trading period were approximately 335 million so shares issued as a percentage of shares traded was 20%.
• The closing stock price on February 17th was $4.47, so the average issuance price was a massive 57% discount.
• The average price for shares issued last week was an even starker $1.67. This equaled a 25% discount from the $2.24 closing price on Friday February 24th.
• Gross proceeds through Friday March 3rd were $130 million and net proceeds were $127.8 million.
• DRYS may issue an additional $70 million of common stock under the Prospectus Supplement. Based on the Friday closing price of $1.37, the discount history during the last two weeks, and assuming no positive announcements from the Company, DRYS may need to issue another 70 million shares to raise the final $70 million.
• Average trading volume last week was 46.7 million/day. This average was boosted by Tuesday volume of 61.4 triggered by the dividend announcement and the related short-lived intraday short squeeze and Friday volume of 64.15 million driven by heavy selling in the early morning and throughout the afternoon in anticipation of bad news after the close. DRYS did not disappoint with the bad news.
• With more shares outstanding, average daily volume may increase next week but, even at 55 million/day (which would equal a very high 50+% of shares outstanding on March 3rd), it would take more than six days to issue 70 million shares at the 20% issuance rate noted above. The stock issuance therefore could easily drag on for more than 6 days.