My expectation is that Dry Ships (DRYS) will use the drilling segment to buoy up the bulk shipping segment until conditions improve at which time the drilling segment will be spun off. I would think that there is a good chance
that share holders of (DRYS) will see a benefit. This will be in the form of equity in the spun off unit and an improvement of (DRYS) balance sheet as the debt goes with the spun off unit. Dryships has proposed spinning off its drill unit for a long time. It has already proposed a $500 private offering. But when its public offering does happen, Dryships’ shareholders should get these spin-off shares on the cheap. At about $5.86 a share, how much is the drill unit worth? The first contract was $160 million. The second contract was $77 million. So that is $237 million there. From the private offering last Friday, a 20% stake in the drill unit is estimated at $500 million. So 100% of the drill unit is supposedly worth $2.5 billion. That is well over the company’s market cap of $1.82 billion. From this, clearly the shares are undervalued. MarketClub has a very interesting take on how DRYS performs going forward. For their FREE DRYS stock report sent directly to your in-box just click here.
