This is how it starts out;
ATHENS-based DryShips has cancelled its proposed $400m acquisition of four panamaxes from companies beneficially owned by DryShips chief executive George Economou in order to preserve cash.
The company blamed a “significant deterioration in the dry bulk market”.
You caught that right? From companies beneficially owned by the chief executive of DryShips.
Later on in the article;
As part of the deal originally signed in July, the selling companies will retain the deposits totaling $55m for the four vessels, the company said.
The company also inked a revised deal with those selling entities, which gives it an exclusive option to buy the same four panamax ships for $160m.
Due to cancellation of the deal and purchase of exclusive options, DryShips paid an extra $26.3m per vessel.
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.
Of course, the entire dry bulk market is a mess, but it's not like DryShips was buying these new, direct from a shipyard. If they were new, then George was being a go-between.
I know it seems like I am "George bashing", but I just don't have a warm and fuzzy feeling about this whole thing.
Oh, and I do not own this stock.
Marketwatch has the press release from DryShips, and the stock is going up.
The problem is people don't realize this company can go bust, probably not in the next few weeks, but my guess is within the next year. Furthermore, they are a very small player.
But, I guess if you play it right, there is money to be made trading this stock - people are putting in puts and calls.
I will try to do a posting next week with the various players and market shares - the ones listed in the U.S. are very minor players.
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