George Economou’s DryShips has announced a 1-7 reverse stock split as it continues to struggle to reverse a free fall in its share price. The move comes despite more than 10 law firms announcing class action law suits against the company since Friday, alleging it violated federal securities laws.
The firms accuse DryShips of making materially false and misleading statements, systemic stock-manipulation to artificially inflate the company’s share price and using an illegal capital-raising scheme issuing shares to Kalani Investments, who then sold the shares on the open market.
To counter the dilution caused by the share issues, DryShips has issued a series of reverse stock splits, all of which have sent the stock plummeting further.
DryShips said this latest reverse split will take effect at the opening of trading on July 21, reducing the number of issued and outstanding common shares to approximately 5.2 million.
Investors reacted by sending DryShips shares down 29.17% in after-hours trading to just $0.59. Shares had actually closed up 4.4% yesterday, partly based on an announcement regarding the class action law suits.
“DryShips and its management believe that the complaint is without merit and plan to vigorously defend themselves against the allegations,” the company stated.