DryShips’ Ability to Continue Compromised as It Defaults on Loans

 New York-listed owner of drybulk carriers and offshore support vessels DryShips said that it had defaulted on some of its loan agreements as of March 31, 2016 and with potential repercussions resulting from the breaches the company may struggle to maintain its business.

“We are currently in negotiations with our lenders to obtain debt maturity extensions or restructuring of our debt facilities,” the company said in its annual report, adding that it cannot guarantee that it will be able to obtain the lenders’consent.

Should the company fail to remedy, or obtain a waiver of the breaches its lenders may accelerate its indebtedness, which could trigger the cross-acceleration or cross-default provisions contained in the company’s other credit facilities, under which a total of USD 341.9 million was outstanding as of December 31, 2015, DryShips explained.

“If our indebtedness is accelerated, it will be very difficult in the current financing environment for us to refinance our debt or obtain additional financing and we could lose our vessels if our lenders foreclose their liens, which could impair our ability to conduct our business and continue as a going concern,” the company adds.

In addition, the company’s public accounting firm has issued its opinion that expresses substantial doubt about DryShips’ ability to continue as a going concern.

Furthermore, DryShips said that it does not expect that cash on hand and cash expected to be generated from operations will be sufficient to repay its loans relating to its drybulk and offshore support fleet.

“In such a scenario, we would have to seek to access the capital markets to fund the mandatory payments,” the company explained.

The announcement comes following DryShips’ sale completion of its three bulk carriers, the Fakarava, Rangiroa and Negonego along with the associated bank debt, to entities controlled by the company’s chairman and CEO, George Economou.

As a result of the transaction, the company says that its total bank debt has been reduced by USD 102.1 million, and currently stands at USD 213.7 million.

The company posted a net loss of USD 2.84bn for 2015.

World Maritime News Staff