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DryShips (DRYS) Prices Convertible Senior Notes and Increases Offering to $400M; To Lend 26.1M Common to Deutsche Bank

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November 20, 2009 6:55 AM EST

DryShips Inc. (NASDAQ: DRYS) today announced the pricing of its previously announced public offering of convertible senior notes. The offering size was increased from $300 million to $400 million. The sale of the convertible notes is expected to close on November 25, 2009, subject to customary closing conditions.

The convertible notes, which are being issued at a price equal to 100% of their face value, will have an interest rate of 5%. The convertible notes will be senior unsecured obligations of the Company. The initial conversion price for the convertible notes will be $7.19 per share.

The underwriter for the offering will also have the option to purchase up to $60 million principal amount of additional convertible notes solely to cover any over-allotments. The Company estimates that the net proceeds from the offering will be approximately $387 million after deducting underwriter discounts and commissions and estimated offering expenses payable by the Company assuming the over-allotment option is not exercised. The Company intends to use the proceeds from the offering for vessel acquisitions and other general corporate purposes.

Concurrently with the offering of the convertible notes, the Company has entered into a share lending agreement with Deutsche Bank AG, London Branch, under which it will loan to Deutsche Bank AG 26.1 million shares of its common stock. The Company has also entered into an equity underwriting agreement with Deutsche Bank Securities Inc. pursuant to which Deutsche Bank AG or its affiliates intend to sell shares of the Company's common stock that they will be entitled to borrow from the Company under the share lending agreement.