0000919574-17-000453.txt : 20170112 0000919574-17-000453.hdr.sgml : 20170112 20170112161526 ACCESSION NUMBER: 0000919574-17-000453 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20170131 FILED AS OF DATE: 20170112 DATE AS OF CHANGE: 20170112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DryShips Inc. CENTRAL INDEX KEY: 0001308858 STANDARD INDUSTRIAL CLASSIFICATION: DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-33922 FILM NUMBER: 17525267 BUSINESS ADDRESS: STREET 1: 109 KIFISSIAS AVENUE AND SINA STREET STREET 2: MAROUSI CITY: ATHENS STATE: J3 ZIP: 151 24 BUSINESS PHONE: 011-30-210-809-0570 MAIL ADDRESS: STREET 1: 109 KIFISSIAS AVENUE AND SINA STREET STREET 2: MAROUSI CITY: ATHENS STATE: J3 ZIP: 151 24 6-K 1 d7392399_6-k.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934


 For the month of January 2017

Commission File Number 001-33922


 DRYSHIPS INC.


 109 Kifissias Avenue and Sina Street
151 24, Marousi
Athens, Greece
(Address of principal executive offices)



Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.


 Form 20-F [X]       Form 40-F [  ]


 Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [  ].


Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.


 Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [  ].


Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.


INFORMATION CONTAINED IN THIS FORM 6-K REPORT



DryShips Inc. (the "Company") is furnishing the following information pursuant to certain disclosure requirements contained in its Audit Committee Charter concerning the approval of related-party transactions.

On January 5, 2017, the Company agreed to enter into a "zero cost" Option Agreement (the "LPG Option Agreement") with companies controlled by its Chairman and Chief Executive Officer, Mr. George Economou, to purchase up to four high specification Very Large Gas Carriers ("VLGCs") capable of carrying liquefied petroleum gas ("LPG") that are currently under construction at Hyundai Samho Heavy Industries Co., Ltd. ("HHI").  Each of the four VLGCs are expected to be employed on long term charters to major oil companies and oil traders.

Under the terms of the LPG Option Agreement, the Company will have three months to exercise four separate options to purchase up to the four VLGCs at a price of $83.5 million per vessel. If the Company exercises all four of its options, the total purchase price of the VLGC fleet will be $334.0 million. The transaction has been approved by the independent directors of the Company based on third party broker valuations. The Company intends to finance any acquisition of the vessels by using cash on hand, its undrawn liquidity under the previously announced new Sifnos revolver and proceeds from its previously announced issuer managed equity transaction.

If acquired, the vessels will be managed by TMS Cardiff Gas, a company controlled by the Company's Chairman and Chief Executive Officer, Mr. George Economou, on the same terms as the previously announced new TMS agreements. TMS Cardiff Gas has a strong track record in managing gas carriers including LNG vessels and is approved by all major oil and gas customers.
 
The table below summarizes the main details of the proposed transaction:

Vessels
Scheduled
Delivery
Purchase Price
Option Declaration Deadline
Employment
Total Backlog (incl. optional periods)
1
June 2017
$83.5 million
April 4, 2017
5 years TC(1)  plus 1+1+1 years in CHOPT(2)
Approximately $390 million in the aggregate
2
September 2017
$83.5 million
April 4, 2017
5 years TC(1) plus 1+1+1 years in CHOPT(2)
3
October 2017
$83.5 million
April 4, 2017
10 years TC(1)
4
December 2017
$83.5 million
April 4, 2017
10 years TC(1)

(1) TC stands for time charter.
(2) CHOPT stands for Charterers Option.

The Company's Board of Directors and the Audit Committee of the Board of Directors approved the LPG Option Agreement on the basis, in part, of valuations provided by two independent third-party shipbrokers.

On January 9, 2017, the Company exercised its first option under the LPG Option Agreement to acquire one VLGC for a purchase price of $83.5 million. Part of the purchase price (approximately 25%) will be paid on closing, expected within January, with the balance payable in installments until the vessel's delivery from HHI. The VLGC is expected to be employed on a fixed rate time charter with five years firm duration to an oil major. The charterer has options to extend the firm employment period by up to three years. The Company expects the total gross backlog associated with this time charter to be $54.0 million, or $92.7 million including the optional periods, and expects to take delivery of the vessel in June 2017.  The option exercise was approved by the independent directors of the Company based on the previously mentioned valuations provided by two independent third-party shipbrokers.


Forward-Looking Statements
Matters discussed in this report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with such safe harbor legislation.
Forward-looking statements reflect the Company's current views with respect to future events, including the LPG Option Agreement transactions, the issuer managed equity transaction, and the Company's financial performance and may include statements concerning plans, objectives, goals, strategies and other statements.
The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in the Company's records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company's control, the Company cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.
Important factors that, in the Company's view, could cause actual results to differ materially from those discussed in the forward-looking statements include the factors related to consummating the LPG Option Agreement transactions, factors related to consummating the issuer managed equity transaction, the strength of world economies and currencies, general market conditions, including changes in charter rates and vessel values, failure of a seller or shipyard to deliver one or more vessels, failure of a buyer to accept delivery of a vessel, inability to procure acquisition financing, default by one or more charterers of our ships, changes in demand for drybulk or LPG commodities, changes in demand that may affect attitudes of time charterers, scheduled and unscheduled drydocking, changes in our voyage and operating expenses, including bunker prices, dry-docking and insurance costs, changes in governmental rules and regulations, changes in our relationships with the lenders under our debt agreements, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents, international hostilities and political events or acts by terrorists.
Risks and uncertainties are further described in reports filed by the Company with the Securities and Exchange Commission, including the Company's most recently filed Annual Report on Form 20-F.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



 
DRYSHIPS INC.
 
(Registrant)
   
     
     
Dated:  January 12, 2017
By:
/s/ Anthony Kandylidis
   
Anthony Kandylidis
   
President and Chief Financial Officer