Tuesday, December 16, 2008

DryShips Cancellation approved by Audit Committee

I guess the Audit Committee came from Chicago.

In my blog of Dec. 11 re DryShips cancelling ships orders (from a company owned by the chairman of DryShips) I stated

Was that really in the best interest of the stockholders?

In the U.S. there are requirements that related companies treat each other at "arms length", meaning they need to treat each other as they would any other company.


Today, in Maritime Global Net
The Audit Committee of DryShips Inc. concluded that due to the significant deterioration in the dry bulk market since the time the agreements were entered into, it would not be in the best interest of DryShips Inc. to consummate the transaction.


In the blogs at Lloyd's List, Tony Gray had this to say

Critics point out that the $160m that is flowing into the private coffers probably more than covers the newbuilding cost of the four panamaxes. They argue that the terms of the cancellation are punitive and question the basis on which the option fee of $26.3m per vessel has been agreed.

Those taking a more positive view of the arrangement suggest that DryShips, where Mr Economou is chief executive and the major shareholder, has extricated itself from a hefty liability.

click here for complete post

And yet, the stock price goes up.

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