DryShips COO Pankaj Khanna says the company hopes to ink crucial charter contracts on two offshore rigs "within the next two quarters," moving one step closer to a hotly anticipated IPO of its drillships business.
The subject of the company's drillship operation has become such a hot topic among investors that it has overwhelmed nearly all other concerns about DryShips, which has in the past run into trouble with its creditors and shown a propensity to dilute shareholders with huge at-the-market equity offerings. The company's chief executive and founder, George Economou, has also come in for criticism in the past for a lack of transparency in some of his business dealings. But, these days, it's all about the drillships business, which Khanna said could eventually have an enterprise value of more than $5 billion and add another $8 to $12 to DryShips' stock price. That, however, is a best-case scenario since it assumes perfect execution on the part of the company in obtaining charter contracts and floating shares of the drillships business in a timely manner, Khanna added. If the company were to break-up and liquidate the drillships business today, he said, it would be worth up to $7 a share. "Whichever way you look at it today, DryShips is a very cheap buy," Khanna said of the company's stock price, which ended trading Thursday at $5.66, down 16 cents, or 2.8%, on lighter-than-average volume. "You're buying a free option on my drillships." Khanna sat down with TheStreet at a conference put together by a shipping-industry investor-relations and PR firm called Capital Link at the Metropolitan Club in Midtown Manhattan. (Capital Link serves as DryShips' IR and PR firm.) Also in attendance were top executives for Paragon Shipping ( PRGN), Navios Maritime Holdings ( NMM), Safe Bulkers ( SB) and Star Bulk Carriers ( SBLK), among others. On Friday, Khanna and about 20 others will ring the opening bell at the Nasdaq stock market to celebrate DryShips' fifth anniversary as a public entity. Economou, however, won't be there. He had another commitment, Khanna said. DryShips fans may note that the company's IPO was in February 2005, not March. Nasdaq opening bell ceremonies are evidently tough tickets. "The only slot we could get was the 26th of March," Khanna said. -- Reported by Scott Eden in New York