DryShips (DRYS) Disclosed of Covenant Breach, In Talks With Lenders
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DryShips (Nasdaq: DRYS) discloses that two of their leading banks notified them that they are in breach of certain financial covenants. The company it is in discussions with the lenders for waivers and amendment of certain financial and other covenants.
From the Filing:
"Two of our leading banks, which collectively held $751.8 million of our indebtedness as of December 31, 2008, have notified us that we are in breach of certain financial covenants contained in our loan agreements, and we have been in communication with another lender that currently holds $650 million of our outstanding indebtedness regarding breach of loan covenants. Currently, we are in discussions with these and other lenders for waivers and amendment of certain financial and other covenants contained in our loan agreements. There can be no assurance that we will be successful in obtaining such waivers and amendments. In addition, in connection with any waivers and/or amendments to our loan agreements, our lenders may impose additional operating and financial restrictions on us and/or modify the terms of our existing loan agreements. These restrictions may limit our ability to, among other things, pay dividends, make capital expenditures and/or incur additional indebtedness, including through the issuance of guarantees. In addition, our lenders may require the payment of additional fees, require prepayment of a portion of our indebtedness to them, accelerate the amortization schedule for our indebtedness and increase the interest rates they charge us on our outstanding indebtedness. We may be required to use a significant portion of the proceeds from future equity offerings to repay a portion of our outstanding indebtedness. If our lenders declare an event of default, our lenders have the right to accelerate our outstanding indebtedness under the relevant agreement and foreclose the liens on the vessels mortgaged thereunder."
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Comments
drys
this news isn't new to those who read their cancelation of dividend, etc purchase of ships. Nothing unexpected, actually is good news to bottom line. This stock has bottomed, watch it go to 25 in a month. as commodities rise, it rises, they are starting
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DRYS turn get #$!^%ed
Mike on Jan 28, 2009 06:44 PMGE has been doing to shareholders and now the lenders will do it to him and the shareholders. They will begin to squeeze forbearance fees out of them. This will certainly test GEs relationship with these lenders. While this will put a cloud over DRYS in the short-run, if the shipping market keeps improving, they will outrun these issues. In some ways I think it is good that the lenders will keep GE on a short leash.