DryShips Announces Partial Spin Off of Ocean Rig UDW Inc.

News Release DryShips Inc. August 5, 2011

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ATHENS, GREECE – August 4, 2011
- DryShips Inc. (NASDAQ: DRYS) (the “Company” or
“DryShips”), a global provider of marine transportation
services for drybulk and petroleum cargoes
and off-shore contract drilling oil services, announced today that
its Board of Directors has approved
the partial spin-off of its interest
in the Company’s majority-owned subsidiary Ocean Rig UDW Inc.,
of which DryShips currently owns approximately 78% of the issued
and outstanding common stock.
DryShips will distribute approximately 2,967,359 shares of common
stock of Ocean Rig UDW Inc.,
which will reduce DryShips’ ownership interest in Ocean Rig UDW by
approximately 2%. The
number of shares of common stock of Ocean Rig UDW to be
distributed for each share of common
stock of DryShips will be determined by dividing 2,967,359 by the
aggregate number of issued and
outstanding shares of common stock of DryShips on September 21,
2011, the record date for the
distribution. As of August 4, 2011, DryShips had outstanding
399,151,783 common shares, which
would have resulted in the distribution of 0.007434 shares of
common stock of Ocean Rig UDW for
every one (1) share of common stock of DryShips.
Fractional shares of Ocean Rig UDW common stock will not be
distributed to DryShips’
shareholders. Instead, fractional shares of Ocean Rig UDW will be
aggregated and sold in the open
market, with the net proceeds distributed pro rata in the form of
cash payments to DryShips’
shareholders who would otherwise be entitled to receive a
fractional share of Ocean Rig UDW
common stock.
No action or payment is required by DryShips’
shareholders to receive shares of Ocean Rig UDW
common stock. An Information Statement containing details
regarding the distribution of the Ocean
Rig UDW common stock will be mailed to DryShips’
shareholders prior to the distribution date.
Investors are encouraged to consult with their financial advisers
regarding the specific implications of
buying or selling DryShips common stock on or after the
ex-dividend date.
The distribution of shares of Ocean Rig UDW common stock or cash
in lieu thereof in the partial
spin-off will be characterized as a taxable dividend for United
States federal income tax purposes. The
amount of the dividend for such tax purposes will be equal to the
sum of (x) the fair market value of
Ocean Rig UDW Shares received by a U.S. Holder; and (y) any cash
payment in lieu of fractional
shares paid to a U.S. Holder. You should treat the effective date
of the partial spin-off as the date of
the dividend. DryShips shareholders are urged to consult with
their tax advisors with respect to the
U.S. federal, state, local and foreign tax consequences of the
partial spin-off.
Pursuant to the indenture governing the Company’s
$700.0 million aggregate principal amount of 5%
Convertible Senior Notes due December 1, 2014 (the
“Convertible Senior Notes”), the distribution
of
shares of Ocean Rig UDW common stock will result in a downward
adjustment of the conversion
price at which each $1,000 aggregate principal amount of
Convertible Senior Notes may be converted
into shares of common stock of the Company. The new conversion
price will be effective as of the
ex-dividend date of the distribution of shares of Ocean Rig UDW
common stock and will be provided
to noteholders as soon as it can be determined under the
provisions of the indenture. The distribution
of shares of Ocean Rig UDW common stock does not provide
noteholders the right to convert the
Convertible Senior Notes.
Ocean Rig UDW has applied to list its common stock on the Nasdaq
Global Select Market. Ocean Rig
UDW common stock is expected to begin trading on a
“when-issued” basis on the Nasdaq
Global
Select Market beginning in mid September 2011. Ocean Rig UDW
common stock is expected to
begin “regular-way” trading
in October 2011 under
the symbol “ORIG”.
George Economou, Chairman and Chief Executive Officer of the
Company commented: We are
pleased to announce the partial spin off of Ocean Rig UDW to our
shareholders. The investment
decision that was taken in 2007 to diversify into the ultra
deepwater drilling sector is set to be a
profitable venture that we believe will deliver substantial value
to DryShips shareholders. We
believe that the intrinsic value of Ocean Rig is substantially
higher than what has been used to
determine the number of shares that will be distributed, thereby
implying a much higher dollar value
to the shareholders than the $50 million headline number. This
dividend is the first step in delivering
value to our shareholders from the Ocean Rig investment and we are
considering further alternatives
including regular dividends and stock
buybacks.</DIV></BODY></HTML>