Ocean Rig impairment hits Dryships with $1.44bn loss

Ocean Rig impairment hits Dryships with $1.44bn loss

Deconsolidating Ocean Rig has cost Dryships $1.35bn, which is chiefly responsible for the $1.44bn net loss the NASDAQ company recorded in its financial results for the second-quarter 2015.

The company made a net loss of $5.6m during the same period last year.

On July 30, Dryships agreed to exchange the outstanding $80m it borrowed under a $120m loan facility for 17,777,778 of its shares in Ocean Rig. In May, DryShips agreed to partially exchange $40m borrowed by the company from the same loan for 4,444,444 of its shares in Ocean Rig.

Ocean Rig’s board of directors in July opted to suspend the company’s quarterly dividend until offshore drilling market conditions improve. The huge loss is not good news for the Athens-based company, which has just 73 days (until October 12) to restore its stock price to above $1.00 per share or face losing its listing on the NASDAQ Global Select Market. At the time of writing, the company’s stock is trading at $0.507 per share – way down on $2.79 per share a year ago.

“Dryships’ second quarter results were burdened with one-off non-cash losses mainly associated with the deconsolidation of Ocean Rig. More recently, our stake in Ocean Rig has fallen even further as a result of the settlement of the $120m promissory note by means of shares of Ocean Rig,” George Economou (pictured), chairman and CEO of Dryships, said. “Following the consummation of the transaction, Dryships will continue to remain the largest single shareholder in Ocean Rig with an approximately 40% direct ownership.

“Going forward, Dryships’ cashflow will be driven solely by the conditions of the drybulk market, given also the recent dividend suspension announced by Ocean Rig,” Economou said. “We believe that the recent improvement in the drybulk market, while helpful, does not significantly change our outlook for a challenging environment in the next 18 months, and we remain prepared for the uncertainty ahead.”

DryShips received a written notice from NASDAQ on April 13, which stated that the company no longer meets the minimum bid price requirement for the NASDAQ Global Select Market because its stock had traded below $1.00 for the last 30 consecutive business days.

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.

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