DryShips Inc. And Oceanfreight Inc. Announce Merger Agreement
News Release
DryShips Inc.
July 27, 2011
ATHENS, GREECE – July 26, 2011 - DryShips Inc. (NASDAQ: DRYS) and
OceanFreight Inc. (NASDAQ: OCNF) announced today that the companies have entered into
a definitive agreement for DryShips to acquire the outstanding shares of OceanFreight for
consideration per share of $19.85, consisting of $11.25 in cash and 0.52326 of a share of
common stock of Ocean Rig UDW Inc., a global provider of offshore ultra deepwater drilling
services that is 78% owned by DryShips. The Ocean Rig shares that will be received by the
OceanFreight shareholders will be from currently outstanding shares held by DryShips.
Under the terms of the transaction, the Ocean Rig shares will be listed on the Nasdaq Global
Select Market upon the closing of the merger.
Based on the July 25, 2011 closing price of 89.00 NOK ($16.44) for the shares of
Ocean Rig on the Norwegian OTC, the transaction consideration reflects a total equity value
for OceanFreight of approximately $118 million and a total enterprise value of approximately
$239 million, including the assumption of debt.
The transaction has been approved by the Boards of Directors of DryShips and
OceanFreight, by the Audit Committee of the Board of Directors of DryShips, which
negotiated the proposed transaction on behalf of DryShips, and by a Special Committee of
independent directors of OceanFreight established to negotiate the proposed transaction on
behalf of OceanFreight.
The transaction will allow DryShips to acquire high-quality, modern drybulk vessels
with attractive long-term charters. OceanFreight owns a fleet of six vessels, including four
Capesize and two Panamax vessels with a weighted average age of six years and combined
deadweight tonnage of 859,622 tons and has contracted to purchase five newbuilding Very
Large Ore Carriers (VLOC) with a combined deadweight tonnage of approximately one
million tons scheduled to be delivered in 2012 and 2013. DryShips will also benefit by
assuming OceanFreight’s attractively-priced credit facilities. Those facilities have an
aggregate principal amount of $142.8 million, bear interest at Libor plus 250 basis points and
have a final maturity of October 2015.
George Economou, Chairman and CEO of DryShips, commented:
“We are pleased to announce the merger agreement with OceanFreight. This
transaction provides DryShips with a unique opportunity to consolidate the fragmented
drybulk sector by acquiring a high quality, modern fleet with long-term charters to solid
charterers. As previously announced, we have a fleet renewal plan that is being implemented
by selling our older vessels. Given current freight market conditions, our preference is to
acquire younger vessels with medium to long-term charters with moderate financing in place.
The merger with OceanFreight offers us a unique opportunity to renew DryShips fleet,
increase our presence in the Capesize/VLOC sector and augment our fixed revenues, and to
do so at a low point in the cycle at what we consider to be an attractive valuation. We will
achieve this through minimal use of cash and no issuance of additional DryShips equity while
utilizing a mere 2.3% of our ownership stake in Ocean Rig in a manner that will also increase
its public float. We will continue to monitor developments in the shipping industry
selectively as the weak freight market may offer us further strategic acquisition opportunities.
This merger is a testament to the strong position of DryShips and our belief in the long-term
prospects of the drybulk freight market. Pro forma for the merger, Dryships will own a fleet
of eighteen Capesize vessels, the largest among publicly traded shipping companies.”
Professor John Liveris, Chairman of the Board of Directors and Special Committee of
OceanFreight, commented:
“OceanFreight’s merger with DryShips enables our shareholders to realize the
inherent value created from the significant repositioning of the company’s fleet and
employment profile that our management team implemented over the past two years. This
value unfortunately was not reflected in our stock trading price. Additionally, we are pleased
to provide our shareholders with the opportunity to participate in Ocean Rig, a growing
company in the ultra deep water drilling sector. We believe that OceanFreight’s four-year
journey in the public markets has reached a worthy homeport.”
The public shareholders of OceanFreight will receive the consideration for their
shares pursuant to a merger of OceanFreight with a subsidiary of DryShips. The completion
of the merger is subject to customary conditions, including clearance by the U.S. Securities
and Exchange Commission of a registration statement to be filed by Ocean Rig to register the
shares being paid by DryShips in the merger and the listing of those shares on the Nasdaq
Global Select Market. The cash portion of the consideration is to be financed from DryShips'
existing cash resources and is not subject to any financing contingency. The merger is
expected to close in the fourth quarter of 2011.
Simultaneously with the execution of the definitive merger agreement, DryShips,
entities controlled by Mr. Anthony Kandylidis and OceanFreight, entered into a separate
purchase agreement. Under this agreement, DryShips will acquire from the entities
controlled by Mr. Kandylidis all their OceanFreight shares, representing a majority of the
outstanding shares of OceanFreight, for the same consideration per share that the
OceanFreight stockholders will receive in the merger. This acquisition is scheduled to close
four weeks from the execution of the merger agreement, subject to satisfaction of certain
conditions. DryShips intends to vote the OceanFreight shares so acquired in favor of the
merger, which requires approval by a majority vote. The Ocean Rig shares to be paid by
DryShips to the entities controlled by Mr. Kandylidis will be subject to a 6-month lock-up.
Evercore Partners is serving as financial advisors to DryShips in connection with the
transaction and Fried, Frank, Harris, Shriver & Jacobson LLP is serving as DryShips' legal
counsel. Fearnley Fonds ASA is serving as financial advisors to the Special Committee of
the OceanFreight Board of Directors and Seward & Kissel LLP is serving as the Committee’s
legal counsel.
Conference Call
DryShips’ management team will host a conference call on Tuesday, July 26, 2011, at 9:00
a.m. EDT to discuss the transaction.
Conference Call details:
Participants should dial into the call 10 minutes before the scheduled time using the following
numbers: 1(866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or +(44) (0) 1452
542 301 (from outside the US). Please quote “DryShips.”
A replay of the conference call will be available until August 1, 2011. The United States
replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international
replay number is (+44) (0) 1452 550 000 and the access code required for the replay is:
2133051#.
Slides and audio webcast:
There will also be a simultaneous live webcast over the Internet, through the DryShips Inc.
website (www.dryships.com). Participants to the live webcast should register on the website
approximately 10 minutes prior to the start of the webcast
OceanFreight Inc. (NASDAQ: OCNF) announced today that the companies have entered into
a definitive agreement for DryShips to acquire the outstanding shares of OceanFreight for
consideration per share of $19.85, consisting of $11.25 in cash and 0.52326 of a share of
common stock of Ocean Rig UDW Inc., a global provider of offshore ultra deepwater drilling
services that is 78% owned by DryShips. The Ocean Rig shares that will be received by the
OceanFreight shareholders will be from currently outstanding shares held by DryShips.
Under the terms of the transaction, the Ocean Rig shares will be listed on the Nasdaq Global
Select Market upon the closing of the merger.
Based on the July 25, 2011 closing price of 89.00 NOK ($16.44) for the shares of
Ocean Rig on the Norwegian OTC, the transaction consideration reflects a total equity value
for OceanFreight of approximately $118 million and a total enterprise value of approximately
$239 million, including the assumption of debt.
The transaction has been approved by the Boards of Directors of DryShips and
OceanFreight, by the Audit Committee of the Board of Directors of DryShips, which
negotiated the proposed transaction on behalf of DryShips, and by a Special Committee of
independent directors of OceanFreight established to negotiate the proposed transaction on
behalf of OceanFreight.
The transaction will allow DryShips to acquire high-quality, modern drybulk vessels
with attractive long-term charters. OceanFreight owns a fleet of six vessels, including four
Capesize and two Panamax vessels with a weighted average age of six years and combined
deadweight tonnage of 859,622 tons and has contracted to purchase five newbuilding Very
Large Ore Carriers (VLOC) with a combined deadweight tonnage of approximately one
million tons scheduled to be delivered in 2012 and 2013. DryShips will also benefit by
assuming OceanFreight’s attractively-priced credit facilities. Those facilities have an
aggregate principal amount of $142.8 million, bear interest at Libor plus 250 basis points and
have a final maturity of October 2015.
George Economou, Chairman and CEO of DryShips, commented:
“We are pleased to announce the merger agreement with OceanFreight. This
transaction provides DryShips with a unique opportunity to consolidate the fragmented
drybulk sector by acquiring a high quality, modern fleet with long-term charters to solid
charterers. As previously announced, we have a fleet renewal plan that is being implemented
by selling our older vessels. Given current freight market conditions, our preference is to
acquire younger vessels with medium to long-term charters with moderate financing in place.
The merger with OceanFreight offers us a unique opportunity to renew DryShips fleet,
increase our presence in the Capesize/VLOC sector and augment our fixed revenues, and to
do so at a low point in the cycle at what we consider to be an attractive valuation. We will
achieve this through minimal use of cash and no issuance of additional DryShips equity while
utilizing a mere 2.3% of our ownership stake in Ocean Rig in a manner that will also increase
its public float. We will continue to monitor developments in the shipping industry
selectively as the weak freight market may offer us further strategic acquisition opportunities.
This merger is a testament to the strong position of DryShips and our belief in the long-term
prospects of the drybulk freight market. Pro forma for the merger, Dryships will own a fleet
of eighteen Capesize vessels, the largest among publicly traded shipping companies.”
Professor John Liveris, Chairman of the Board of Directors and Special Committee of
OceanFreight, commented:
“OceanFreight’s merger with DryShips enables our shareholders to realize the
inherent value created from the significant repositioning of the company’s fleet and
employment profile that our management team implemented over the past two years. This
value unfortunately was not reflected in our stock trading price. Additionally, we are pleased
to provide our shareholders with the opportunity to participate in Ocean Rig, a growing
company in the ultra deep water drilling sector. We believe that OceanFreight’s four-year
journey in the public markets has reached a worthy homeport.”
The public shareholders of OceanFreight will receive the consideration for their
shares pursuant to a merger of OceanFreight with a subsidiary of DryShips. The completion
of the merger is subject to customary conditions, including clearance by the U.S. Securities
and Exchange Commission of a registration statement to be filed by Ocean Rig to register the
shares being paid by DryShips in the merger and the listing of those shares on the Nasdaq
Global Select Market. The cash portion of the consideration is to be financed from DryShips'
existing cash resources and is not subject to any financing contingency. The merger is
expected to close in the fourth quarter of 2011.
Simultaneously with the execution of the definitive merger agreement, DryShips,
entities controlled by Mr. Anthony Kandylidis and OceanFreight, entered into a separate
purchase agreement. Under this agreement, DryShips will acquire from the entities
controlled by Mr. Kandylidis all their OceanFreight shares, representing a majority of the
outstanding shares of OceanFreight, for the same consideration per share that the
OceanFreight stockholders will receive in the merger. This acquisition is scheduled to close
four weeks from the execution of the merger agreement, subject to satisfaction of certain
conditions. DryShips intends to vote the OceanFreight shares so acquired in favor of the
merger, which requires approval by a majority vote. The Ocean Rig shares to be paid by
DryShips to the entities controlled by Mr. Kandylidis will be subject to a 6-month lock-up.
Evercore Partners is serving as financial advisors to DryShips in connection with the
transaction and Fried, Frank, Harris, Shriver & Jacobson LLP is serving as DryShips' legal
counsel. Fearnley Fonds ASA is serving as financial advisors to the Special Committee of
the OceanFreight Board of Directors and Seward & Kissel LLP is serving as the Committee’s
legal counsel.
Conference Call
DryShips’ management team will host a conference call on Tuesday, July 26, 2011, at 9:00
a.m. EDT to discuss the transaction.
Conference Call details:
Participants should dial into the call 10 minutes before the scheduled time using the following
numbers: 1(866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or +(44) (0) 1452
542 301 (from outside the US). Please quote “DryShips.”
A replay of the conference call will be available until August 1, 2011. The United States
replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international
replay number is (+44) (0) 1452 550 000 and the access code required for the replay is:
2133051#.
Slides and audio webcast:
There will also be a simultaneous live webcast over the Internet, through the DryShips Inc.
website (www.dryships.com). Participants to the live webcast should register on the website
approximately 10 minutes prior to the start of the webcast