NEW YORK ( The Deal) -- As DryShips ( DRYS) works to restructure $5.4 billion in debt, the heavily leveraged ship operator has succeeded in securing amendments to a $1.9 billion term loan held by its healthier subsidiary, Ocean Rig UDW.
The Athens-based dry bulk carrier said on Feb. 7 that Ocean Rig, its offshore drilling subsidiary, has refinanced its $1.8 billion Term Loan B package for $1.9 billion in similar B term loans that will mature no earlier than the third quarter of 2020.
The smaller portion of the original Term Loan B package was set to mature during the third quarter of 2016, while the larger portion was due during the first quarter of 2021.
According to data from Bloomberg Finance, one new $821 million senior secured B term loan will bear interest at Libor plus 500, but its maturity date is undisclosed. Another new B secured term loan, for $1.075 billion, is set to mature on March 31, 2021, and will also bear interest at Libor plus 500.
That maturity extension to 2021 provides some relief for loss-ridden DryShips, which projected a brisk debt payment schedule for the coming years in its financial report for the nine months ended Sept. 30. At that time, DryShips reported $1.08 billion due by Sept. 30, 2014; $759 million by Sept. 30, 2015; and $1.36 billion by Sept. 30, 2016.
As of Sept. 30, DryShips had $506.2 million in cash and cash equivalents and $172.3 million in restricted cash.
The company said in its financial report, filed Nov. 5, "We believe that we will be able to satisfy our liquidity needs for the next 12 months with the cash we generate from our operations and proceeds from future debt or equity issuances."
But DryShips also warned, "We are currently in negotiations with our lenders to obtain waivers of our covenant breaches and extend our existing waivers of covenant breaches, or to restructure the affected debt."
The shipper said it has breached debt covenants including its interest coverage ratio covenant.
As it continues its restructuring talks, DryShips also hopes to raise about $986.5 million in new debt or equity financing to pay for six new ships that it has ordered: four Panamax ships and two drillships.