This is why it bothers me when an owner/chairman says "everything is OK" in this article from Lloyds List, Economou allays fears as DryShips shares fall.
DRYSHIPS boss George Economou has confirmed that his Nasdaq-listed company is in good health after a warning-laden share prospectus filing spooked the market, already jittery from the dry bulk crash.
This is what he is referring to:
DryShips ... register up to 25m new shares in a prospectus filed with the Securities and Exchange Commission.
Among risk factors included in Thursday’s filing, DryShips said that even with a hefty injection of fresh equity from the sale of the new shares it “cannot be assured” that operating and capital needs would be satisfied, or that it would remain in compliance with debt covenants “if the low charter rates in the dry bulk market continue”.
Conjuring up a possible doomsday scenario, the company said: “If we are not able to comply with our loan covenants and our lenders chose to accelerate our indebtedness and foreclose their liens, we could be required to sell vessels in our fleet and our ability to continue to conduct our business would be impaired.”
However, Mr Economou told Lloyd’s List a day later that the grim tone that arguably could be discerned in the filing was a normal one for prospectuses.
“The underwriters put in a lot of risk factors to safeguard our back against litigation,” he said. “We are not breaching any covenants and we are not at risk of breaching covenants. Nor are we planning on breaching them.”
He said an analyst who downgraded the company’s stock had over-reacted.
Hum. Over-reacted. Those nasty SEC requirements to protect investors.
I'll keep an eye on this one. But, who knows. Maybe they will be one of the survivors.
2 comments:
In the post-Enron, post WorldCom, post SOX era, there is plenty of pressure on executives to stick to the truth. The statement that quarterly and annual reports have to list the risks is, basically, true.
So our problem becomes more challenging. We need to figure out how to interpret this information. Being a complete cynic is not the answer.
As one who has a (very) small position in DRYS, I am looking for evidence to step up. I plan to monitor your analysis for some help on that subject.
In fact, I might make this a theme for a series.
Jeff
Thanks for your post.
It has prompted me to take a closer look at DryShips. I will be making a series of post on the BDI, and DryShips in particular.
Hope you will take a look at these, and give us your comments.
Lynda
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