Registration Statement No. 333 -
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DRYSHIPS INC.
(Exact name of registrant as specified in its charter)
Republic of the Marshall Islands N/A
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
DryShips Inc. Seward & Kissel LLP
80 Kifissias Avenue Attention: Gary J. Wolfe, Esq.
Amaroussion 15125 One Battery Park Plaza
Athens, Greece New York, New York 10004
(30) 210 80 90 570 (212) 574-1200
(Address and telephone number of (Name, address and telephone
Registrant's principal executive offices) number of agent for service)
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Copies to:
Gary J. Wolfe, Esq.
Seward & Kissel LLP
One Battery Park Plaza
New York, New York 10004
(212) 574-1200
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Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective as determined by
market conditions and other factors.
If only securities being registered on the Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective Registration Statement
for the same offering. [_]
If this Form is a registration statement pursuant to General Instruction
I.C. or a post-effective amendment thereto that shall become effective upon
filing with the Commission pursuant to Rule 462(e) under the Securities Act,
check the following box. [_]
If this Form is a post-effective amendment to a registration statement
filed pursuant to General Instruction I.C. filed to register additional
securities or additional classes of securities pursuant to Rule 413(b) under the
Securities Act, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Maximum Maximum
Each Class Aggregate Aggregate Amount of
of Securities Amount to be Price Per Offering Registration
to be Registered Registered (1)(4) Share(2) Price (1) Fee
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Common Shares,
par value $ 0.01
per share (3)
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Preferred Shares,
par value $ 0.01
per share (3)
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Debt
Securities (3)(4)
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Guarantees (5)
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Warrants (6)
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Purchase
Contracts (7)
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Units (8)
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Total $150,000,000 100% $150,000,000 $16,050
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(1) Such amount in U.S. dollars or the equivalent thereof in foreign currencies
as shall result in an aggregate initial public offering price for all
securities of $150,000,000.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933. Pursuant to
General Instruction II(C) of Form F-3, the table does not specify by each
class information as to the proposed maximum aggregate offering price. Any
securities registered hereunder may be sold separately or as units with
other securities registered hereunder. In no event will the aggregate
offering price of all securities sold by DryShips Inc. pursuant to this
registration statement exceed $150,000,000.
(3) Also includes such indeterminate amount of debt securities and number of
preferred shares and common shares as may be issued upon conversion of or
in exchange for any other debt securities or preferred shares that provide
for conversion or exchange into other securities.
(4) If any debt securities are issued at an original issue discount, then the
offering may be in such greater principal amount as shall result in a
maximum aggregate offering price not to exceed $150,000,000.
(5) The debt securities may be guaranteed pursuant to guarantees by the
subsidiaries of DryShips Inc. No separate compensation will be received for
the guarantees. Pursuant to Rule 457(n), no separate fees for the
guarantees are payable.
(6) There is being registered hereunder an indeterminate number of warrants as
may from time to time be sold at indeterminate prices.
(7) There is being registered hereunder an indeterminate number of purchase
contracts as may from time to time be sold at indeterminate prices.
(8) There is being registered hereunder an indeterminate number of units as may
from time to time be sold at indeterminate prices. Units may consist of any
combination of the securities registered hereunder.
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The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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Subject to completion, dated April 21, 2006
$150,000,000
DRYSHIPS INC.
[DRYSHIPS LOGO]
Through this prospectus, we may periodically offer:
(1) our common stock,
(2) our preferred shares,
(3) our debt securities, which may be guaranteed by one or more
of our subsidiaries,
(4) our warrants,
(5) our purchase contracts, and
(6) our units.
The aggregate offering price of all securities issued under this prospectus
may not exceed $150,000,000. The prices and other terms of the securities that
we will offer will be determined at the time of their offering and will be
described in a supplement to this prospectus.
Our common shares are currently quoted on The Nasdaq National Market under
the symbol "DRYS."
The securities issued under this prospectus may be offered directly or
through underwriters, agents or dealers. The names of any underwriters, agents
or dealers will be included in a supplement to this prospectus.
An investment in these securities involves risks. See the section entitled
"Risk Factors" beginning on page .
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 2006
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY...........................................................1
RISK FACTORS.................................................................5
USE OF PROCEEDS.............................................................14
RATIO OF EARNINGS TO FIXED CHARGES..........................................16
CAPITALIZATION..............................................................17
PLAN OF DISTRIBUTION........................................................18
ENFORCEMENT OF CIVIL LIABILITIES............................................20
DESCRIPTION OF CAPITAL STOCK................................................21
DESCRIPTION OF PREFERRED SHARES.............................................23
DESCRIPTION OF WARRANTS.....................................................24
DESCRIPTION OF DEBT SECURITIES..............................................25
DESCRIPTION OF PURCHASE CONTRACTS...........................................34
DESCRIPTION OF UNITS........................................................35
EXPENSES....................................................................35
LEGAL MATTERS...............................................................35
EXPERTS.....................................................................36
WHERE YOU CAN FIND ADDITIONAL INFORMATION...................................36
Unless otherwise indicated, all dollar references in this prospectus are to
U.S. dollars and financial information presented in this prospectus that is
derived from financial statements incorporated by reference is prepared in
accordance with accounting principles generally accepted in the United States.
This prospectus is part of a registration statement we filed with the
Securities Exchange Commission, or Commission, using a shelf registration
process. Under the shelf registration process, we may sell the common shares,
preferred shares, debt securities (and related guarantees), warrants, purchase
contracts and units described in this prospectus in one or more offerings up to
a total dollar amount of $150,000,000. This prospectus provides you with a
general description of the securities we may offer. Each time we offer
securities, we will provide you with a prospectus supplement that will describe
the specific amounts, prices and terms of the offered securities. The prospectus
supplement may also add, update or change the information contained in this
prospectus. You should read carefully both this prospectus and any prospectus
supplement, together with the additional information described below.
This prospectus does not contain all the information provided in the
registration statement we filed with the Commission. For further information
about us or the securities offered hereby, you should refer to that registration
statement, which you can obtain from the Commission as described below under
"Where You Can Find More Information".
This section summarizes some of the information that is contained later in
this prospectus or in other documents incorporated by reference into this
prospectus. As an investor or prospective investor, you should review carefully
the risk factors and the more detailed information that appears later in this
prospectus or is contained in the documents that we incorporate by reference
into this prospectus.
PROSPECTUS SUMMARY
Unless the context otherwise requires, as used in this prospectus, the
terms "Company," "we," "us," and "our" refer to DryShips Inc. and all of its
subsidiaries, and "DryShips Inc." refers only to DryShips Inc. and not to its
subsidiaries.
We use the term deadweight, or dwt, in describing the size of vessels. Dwt,
expressed in metric tons each of which is equivalent to 1,000 kilograms, refers
to the maximum weight of cargo and supplies that a vessel can carry.
Our Company
We are a Marshall Islands corporation with our principal executive offices
in Athens, Greece. We were incorporated in September 2004. We own and operate,
through our subsidiaries, 27 drybulk carriers, 21 of which we acquired following
our initial public offering in February 2005. Since our inception in 2004, we
have increased the size and carrying capacity of our fleet from six vessels and
approximately 514,890 dwt to 27 vessels of approximately 2,264,225 dwt.
On February 3, 2005, our common stock began trading on The Nasdaq National
Market under the symbol "DRYS" in connection with our initial public offering.
The net proceeds of our initial public offering, which were approximately $251.3
million, were used to finance the acquisition of 21 vessels, consisting of three
Capesize drybulk carriers, 16 Panamax drybulk carriers and two Handymax drybulk
carriers. The total cost of these acquisitions was approximately $847.6 million.
Our fleet of 27 vessels consists of four Capesize drybulk carriers, 21
Panamax drybulk carriers and two Handymax drybulk carriers. One of our Panamax
vessels is a combination carrier that is capable of carrying drybulk cargo or
crude oil and oil products. We refer to our Panamax combination carrier as a
drybulk carrier. Our fleet principally carries a variety of drybulk commodities
including major bulks such as coal, iron ore, and grains, and minor bulks such
as bauxite, phosphate, fertilizers and steel products. The average age of the
vessels in our fleet is ten years.
We employ our vessels in the spot charter market, under period time
charters and in drybulk carrier pools. Ten of the Panamax drybulk carriers and
one Handymax drybulk carrier in our fleet are currently operated in a Panamax
drybulk carrier pool. Pools have the size and scope to combine spot market
voyages, time charters and contracts of affreightment with freight forward
agreements for hedging purposes and to perform more efficient vessel scheduling
thereby increasing fleet utilization. Eleven of our vessels are currently on
time charter.
All of our vessels are managed by Cardiff Marine Inc., or Cardiff, a
Liberian corporation with offices in Greece. We are under common control with
Cardiff.
As of March 1, 2006, our fleet is comprised of the following vessels:
Name Type Dwt Year
---- ---- --- ----
Manasota Capesize Bulk Carrier 171,061 2004
Alameda Capesize Bulk Carrier 170,662 2001
Shibumi Capesize Bulk Carrier 166,058 1984
Netadola Capesize Bulk Carrier 149,475 1993
Conrad Oldendorff Panamax Bulk Carrier 76,623 2002
Coronado Panamax Bulk Carrier 75,706 2000
Waikiki Panamax Bulk Carrier 75,473 1995
Linda Oldendorff Panamax Bulk Carrier 75,100 1995
Sonoma Panamax Bulk Carrier 74,786 2001
Catalina Panamax Bulk Carrier 74,432 2005
Ocean Crystal Panamax Bulk Carrier 73,688 1999
Belmonte Panamax Bulk Carrier 73,601 2004
Toro Panamax Bulk Carrier 73,034 1995
Xanadu Panamax Bulk Carrier 72,270 1999
La Jolla Panamax Bulk Carrier 72,126 1997
Lacerta Panamax Bulk Carrier 71,862 1994
Panormos Panamax Bulk Carrier 71,747 1995
Paragon Panamax Bulk Carrier 71,250 1995
Iguana Panamax Bulk Carrier 70,349 1996
Daytona Panamax Bulk Carrier 69,703 1989
Lanikai Panamax Bulk Carrier 68,676 1988
Tonga Panamax Bulk Carrier 66,798 1984
Flecha Panamax Bulk Carrier 65,081 1982
Striggla Panamax Bulk Carrier 64,747 1982
Alona Handymax Bulk Carrier 48,040 2002
Matira Handymax Bulk Carrier 45,863 1994
Mostoles Panamax OBO 75,395 1981
Our Business Strategy
We focus our business strategy on providing reliable seaborne
transportation services for drybulk cargoes at a competitive cost. We believe we
can achieve our business objectives and increase shareholder value through our
business strategy. The elements of our business strategy consist of:
o Fleet Expansion Through Second Hand Vessel Acquisitions. We intend to
grow our fleet through timely and selective acquisitions of drybulk
carriers. We will seek to identify potential second hand vessel
acquisition candidates among all size categories of drybulk carriers
in order to gain a worldwide presence in the drybulk carrier market
with a fleet capable of servicing virtually all major ports and routes
used for the seaborne transportation of key commodities and raw
materials. We believe that second-hand vessels when operated in a cost
efficient manner provide better value to shareholders as compared to
more expensive newbuilding vessels. We therefore expect to maintain an
average fleet age of between 10 to 20 years.
o Diversified Fleet Profile. We intend to develop a diversified fleet of
drybulk carriers in all size categories: Capesize, Panamax, Handymax
and Handysize. Larger drybulk carriers, such as Capesize and Panamax
vessels, have historically experienced a greater degree of freight
rate volatility, while smaller drybulk carriers, such as Handymax and
Handysize vessels, enjoy greater charter rate stability. Furthermore,
a diversified drybulk carrier fleet will enable us to serve our
customers in both major and minor bulk trades. Our vessels are able to
trade worldwide in a multitude of trade routes carrying a wide range
of cargoes for a number of industries. Capesize and Panamax drybulk
carriers carry predominantly coal and iron ore for energy and steel
production as well as grain for feedstocks. Handymax and Handysize
drybulk carriers carry iron and steel products, fertilizers, minerals,
forest products, ores, bauxite, alumina, cement and other construction
materials. These raw materials and products are used as production
inputs in a number of industries. We will transport these various
cargoes on several geographical routes thereby reducing our dependency
on any one cargo, trade route or industry and maximizing fleet
utilization.
o Combined Fleet Employment. As we expand our fleet of drybulk carriers,
we will actively and strategically employ our fleet between spot
charters, which generally last for periods of ten days to four months,
and fixed employment contracts, including time or bareboat charters,
which can last up to several years. We will also continue to
participate in drybulk carrier pools. Drybulk carriers operating in
the spot market may generate increased or decreased profit margins
during periods of improvement or deterioration in freight (or charter)
rates, while drybulk carriers operating on fixed employment contracts
provide more predictable cash flows. We may also enter into freight
forward agreements in order to hedge our exposure to market
volatility.
Corporate Structure
Subsequent to our formation in September 2004, we issued 15,400,000 shares
of our common stock to the Entrepreneurial Spirit Foundation, or the Foundation,
as consideration for the contribution to us of all of the issued and outstanding
capital stock of six of our subsidiaries. These subsidiaries own six vessels in
our fleet, namely Shibumi, Flecha, Striggla, Mostoles, Panormos and Lacerta.
Prior to our initial public offering, the Foundation transferred 2,772,000
shares to Advice Investments S.A. and 1,848,000 shares to Magic Management Inc.
In February 2005, we issued 14,950,000 shares of common stock in connection
with our initial public offering.
On February 14, 2006, the Foundation transferred its shares to its
wholly-owned subsidiary, Elios Investments Inc., a corporation organized under
the laws of the Republic of the Marshall Islands ("Elios Investments").
Mr. Economou, our Chairman and Chief Executive Officer, has been active in
shipping since 1976 and formed Cardiff in 1991. Cardiff is responsible for all
technical and commercial management functions of our fleet. We believe that
Cardiff has established a reputation in the international drybulk shipping
industry for operating and maintaining a fleet with high standards of
performance, reliability and safety. We are under common control with Cardiff.
Cardiff is controlled by the Foundation, which in turn, is controlled by Mr.
Economou.
Cardiff provides comprehensive ship management services including technical
supervision, such as repairs, maintenance and inspections, safety and quality,
crewing and training, as well as supply provisioning. Cardiff's commercial
management services include operations, chartering, sale and purchase,
post-fixture administration, accounting, freight invoicing and insurance
consulting. In addition, under the management agreement with Cardiff, Drybulk
S.A., a related party Liberian corporation also under common control with the
Company, acts as the charter and sales and purchase broker for the Company.
Cardiff completed early implementation of the International Maritime
Organization's, or IMO, International Management Code for the Safe Operation of
Ships and Pollution Prevention, or ISM Code, in 1996. Cardiff has obtained
documents of compliance for its office and safety management certificates for
its vessels as required by the ISM Code and has been ISO 14001 certified since
2003, in recognition of its commitment to overall quality.
We maintain our principal executive offices at 80 Kifissias Avenue,
Amaroussion 15125, Athens, Greece. Our telephone number at that address is (011)
(30) (210) 809 0570. We also maintain an office at One Stamford Landing, Suite
214, 62 Southfield Avenue, Stamford, Connecticut 06902. Our telephone number at
that address is (203) 487-3391.
The Securities We May Offer
We may use this prospectus to offer up to $150,000,000 of our:
o common stock,
o preferred shares,
o debt securities, which may be guaranteed by one or more of our
subsidiaries,
o warrants,
o purchase contracts, and
o units.
Our debt securities may be guaranteed pursuant to guarantees by our
subsidiaries.
A prospectus supplement will describe the specific types, amounts, prices,
and detailed terms of any of these offered securities and may describe certain
risks in addition to those set forth below associated with an investment in the
securities. Terms used in the prospectus supplement will have the meanings
described in this prospectus, unless otherwise specified.
RISK FACTORS
You should consider carefully the following factors, as well as the other
information set forth in this prospectus, before making an investment decision.
You should also consider carefully the risks set forth under the heading "Risk
Factors" in any prospectus supplement before investing in the securities offered
thereby. Some of the following risks relate principally to the industry in which
we operate and our business in general. Other risks relate principally to the
securities market and ownership of our stock. Any of the risk factors could
significantly and negatively affect our business, financial condition or
operating results and the trading price of our stock. You could lose all or part
of your investment.
Industry Specific Risk Factors
Charterhire rates for drybulk carriers are volatile, which may adversely affect
our earnings.
The drybulk shipping industry is cyclical with attendant volatility in
charterhire rates and profitability. The degree of charterhire rate volatility
among different types of drybulk carriers has varied widely. Because we
generally charter our vessels pursuant to short-term time or spot charters, we
are exposed to changes in spot market rates for drybulk carriers and such
changes may affect our earnings and the value of our drybulk carriers at any
given time. We cannot assure that we will be able to successfully charter our
vessels in the future at rates sufficient to allow us to meet our financial
obligations or to pay dividends to our stockholders. Because the factors
affecting the supply and demand for vessels are outside of our control and are
unpredictable, the nature, timing, direction and degree of changes in industry
conditions are also unpredictable.
Factors that influence demand for vessel capacity include:
o demand for and production of drybulk products;
o global and regional economic conditions;
o the distance dry bulk is to be moved by sea; and
o changes in seaborne and other transportation patterns.
The factors that influence the supply of vessel capacity include:
o the number of newbuilding deliveries;
o the scrapping rate of older vessels;
o vessel casualties; and
o the number of vessels that are out of service.
We anticipate that the future demand for our drybulk carriers will be dependent
upon continued economic growth in the world's economies, including China,
seasonal and regional changes in demand, changes in the capacity of the global
drybulk carrier fleet and the sources and supply of drybulk cargo to be
transported by sea. The capacity of the global drybulk carrier fleet seems
likely to increase and there can be no assurance that economic growth will
continue. Adverse economic, political, social or other developments could have a
material adverse effect on our business and operating results.
The market values of our vessels may decrease, which could limit the amount of
funds that we can borrow under our credit facilities.
The fair market values of our vessels have generally experienced high
volatility. You should expect the market value of our vessels to fluctuate
depending on general economic and market conditions affecting the shipping
industry and prevailing charterhire rates, competition from other shipping
companies and other modes of transportation, types, sizes and age of vessels,
applicable governmental regulations and the cost of newbuildings. If the market
value of our fleet declines we may not be able to obtain other financing or
incur debt in the future on terms that are acceptable to us or at all.
The market values of our vessels may decrease, which could cause us to breach
covenants in our credit facilities and adversely affect our results of
operations, financial condition and our ability to pay dividends.
If the market values of our vessels decrease, we may breach some of the
covenants contained in the financing agreements relating to our indebtedness,
including covenants in our credit facilities. If we do breach such covenants and
we are unable to remedy the relevant breach, our lenders could accelerate our
debt and foreclose on our fleet. In addition, if the book value of a vessel is
impaired due to unfavorable market conditions or a vessel is sold at a price
below its book value, we would incur a loss that would adversely affect our
financial condition and could adversely affect our ability to pay dividends.
Terrorist attacks and international hostilities could affect our results of
operations and financial condition.
Terrorist attacks such as the attacks on the United States on September 11,
2001, and the continuing response of the United States to these attacks, as well
as the threat of future terrorist attacks, continue to cause uncertainty in the
world financial markets and may affect our business, financial condition and
results of operations. The war in Iraq may lead to additional acts of terrorism,
regional conflict and other armed conflict around the world, which may
contribute to further economic instability in the global financial markets.
These uncertainties could also adversely affect our ability to obtain additional
financing on terms acceptable to us or at all. In the past, political conflicts
have also resulted in attacks on vessels, mining of waterways and other efforts
to disrupt international shipping, particularly in the Arabian Gulf region. Acts
of terrorism and piracy have also affected vessels trading in regions such as
the South China Sea.
Terrorist attacks, such as the October 2002 attack on the VLCC Limburg, a vessel
not related to us, may in the future also negatively affect our operations and
financial condition and directly impact our vessels or our customers. Future
terrorist attacks could result in increased volatility of the financial markets
in the United States and globally and could result in an economic recession
affecting the United States or the entire world. Any of these occurrences could
have a material adverse impact on our revenues and costs.
Our revenues are subject to seasonal fluctuations, which may lead to volatility
in our operating results and limit the amount of available cash with which we
can pay dividends.
We operate our vessels in markets that have historically exhibited seasonal
variations in demand and, as a result, in charterhire rates. This seasonality
may result in quarter-to-quarter volatility in our operating results, which
could affect the amount of dividends that we pay to our stockholders from
quarter to quarter. The drybulk carrier market is typically stronger in the fall
and winter months in anticipation of increased consumption of coal and other raw
materials in the northern hemisphere during the winter months. In addition,
unpredictable weather patterns in these months tend to disrupt vessel scheduling
and supplies of certain commodities.
As a result, our revenues have historically been weaker during the fiscal
quarters ended June 30 and September 30, and, conversely, our revenues have
historically been stronger in fiscal quarters ended December 31 and March 31.
This seasonality could materially affect our operating results and cash
available for distribution to our stockholders as dividends in the future.
Rising fuel prices may adversely affect our profits.
Fuel is a significant, if not the largest, expense in our shipping operations
when vessels are not under period charter. Changes in the price of fuel may
adversely affect our profitability. The price and supply of fuel is
unpredictable and fluctuates based on events outside our control, including
geopolitical developments, supply and demand for oil and gas, actions by OPEC
and other oil and gas producers, war and unrest in oil producing countries and
regions, regional production patterns and environmental concerns. Further, fuel
may become much more expensive in the future, which may reduce the profitability
and competitiveness of our business versus other forms of transportation, such
as truck or rail.
We are subject to international safety regulations and the failure to comply
with these regulations may subject us to increased liability, may adversely
affect our insurance coverage and may result in a denial of access to, or
detention in, certain ports.
The operation of our vessels is affected by the requirements set forth in the
International Maritime Organization's International Management Code for the Safe
Operation of Ships and Pollution Prevention, or ISM Code. The ISM Code requires
ship owners, ship managers and bareboat charterers to develop and maintain an
extensive "Safety Management System" that includes the adoption of a safety and
environmental protection policy setting forth instructions and procedures for
safe operation and describing procedures for dealing with emergencies. The
failure of a ship owner or bareboat charterer to comply with the ISM Code may
subject it to increased liability, may invalidate existing insurance or decrease
available insurance coverage for the affected vessels and may result in a denial
of access to, or detention in, certain ports. All of our vessels are currently
in compliance with the ISM Code.
Maritime claimants could arrest one or more of our vessels, which could
interrupt our cash flow.
Crew members, suppliers of goods and services to a vessel, shippers of cargo and
other parties may be entitled to a maritime lien against a vessel for
unsatisfied debts, claims or damages. In many jurisdictions, a claimant may seek
to obtain security for its claim by arresting a vessel through foreclosure
proceedings. The arrest or attachment of one or more of our vessels could
interrupt our cash flow and require us to pay large sums of money to have the
arrest or attachment lifted. In addition, in some jurisdictions, such as South
Africa, under the "sister ship" theory of liability, a claimant may arrest both
the vessel which is subject to the claimant's maritime lien and any "associated"
vessel, which is any vessel owned or controlled by the same owner. Claimants
could attempt to assert "sister ship" liability against one vessel in our fleet
for claims relating to another of our vessels.
Governments could requisition our vessels during a period of war or emergency,
resulting in a loss of earnings.
A government could requisition one or more of our vessels for title or for hire.
Requisition for title occurs when a government takes control of a vessel and
becomes her owner, while requisition for hire occurs when a government takes
control of a vessel and effectively becomes her charterer at charter rates
dictated by that government. Generally, requisitions occur during periods of war
or emergency, although governments may elect to requisition vessels in other
circumstances.
Although we would be entitled to compensation in the event of a requisition of
one or more of our vessels, the amount and timing of payment would be uncertain.
Government requisition of one or more of our vessels may negatively impact our
revenues and reduce the amount of cash we have available for distribution as
dividends to our stockholders.
Company Specific Risk Factors
We are dependent on short-term time or spot charters in a volatile shipping
industry and a decline in charterhire rates would affect our results of
operations and ability to pay dividends.
We charter our vessels primarily pursuant to short-term time or spot charters.
Although dependence on short-term time or spot charters is not unusual in the
dry bulk shipping industry, the short-term time or spot charter market is highly
competitive and spot market charterhire rates (which affect time charter rates)
may fluctuate significantly based upon available charters and the supply of, and
demand for, seaborne shipping capacity. While our focus on the short-term time
or spot charter market may enable us to benefit in periods of increasing
charterhire rates, we must consistently renew our charters and this dependence
makes us vulnerable to declining charter rates. Drybulk carrier charter rates
are volatile, and in the past short-term time charter and spot market charter
rates for drybulk carriers have declined below operating costs of vessels. We
cannot assure you that future charterhire rates will enable us to operate our
vessels profitably or pay dividends.
We depend entirely on Cardiff to manage and charter our fleet.
We have only two employees, our Chief Executive Officer and our Chief Financial
Officer, and currently have no plans to hire additional employees. We
subcontract the commercial and technical management of our fleet, including
crewing, maintenance and repair to Cardiff Marine Inc., an affiliated company
with which we are under common control, and the loss of Cardiff's services or
its failure to perform its obligations to us could materially and adversely
affect the results of our operations. Although we may have rights against
Cardiff if it defaults on its obligations to us, you will have no recourse
against Cardiff. Further, we are required to seek approval from our lenders to
change our manager.
Cardiff is a privately held company and there is little or no publicly available
information about it.
The ability of Cardiff to continue providing services for our benefit will
depend in part on its own financial strength. Circumstances beyond our control
could impair Cardiff's financial strength, and because it is privately held it
is unlikely that information about its financial strength would become public
unless Cardiff began to default on its obligations. As a result, an investor in
our shares might have little advance warning of problems affecting Cardiff, even
though these problems could have a material adverse effect on us.
Our Chairman and Chief Executive Officer has affiliations with Cardiff which
could create conflicts of interest.
Our majority shareholder is controlled by Mr. George Economou who controls a
company that owns 35.5% of us and a foundation that owns 70% of Cardiff. Mr.
Economou is also our Chairman and Chief Executive Officer, and a director of our
company. These responsibilities and relationships could create conflicts of
interest between us, on the one hand, and Cardiff, on the other hand. These
conflicts may arise in connection with the chartering, purchase, sale and
operations of the vessels in our fleet versus drybulk carriers managed by other
companies affiliated with Cardiff and Mr. Economou. In particular, Cardiff may
give preferential treatment to vessels that are beneficially owned by related
parties because Mr. Economou and members of his family may receive greater
economic benefits.
Companies affiliated with Cardiff own and may acquire vessels that compete with
our fleet.
McCallister Shipping S.A., Calypso Marine Corp. and Glorious Marine Co. Ltd. are
companies affiliated with Cardiff that each owns a Capesize drybulk carrier. The
three vessels owned by those companies, or the Bareboat Charter Vessels, are
currently employed under bareboat charters that end in the period from May 2006
to September 2007. Subject to the obligations of Mr. Economou set forth in a
letter agreement between him and the Company to use commercially reasonable
efforts to cause the sale of the Bareboat Charter Vessels, and to give us a
right of first refusal to acquire them, when the Bareboat Charter Vessels are
redelivered to the owners, they may be managed by Cardiff in competition with
our fleet. In addition, Cardiff affiliates may acquire additional drybulk
carriers in the future, subject to a right of first refusal that Mr. Economou
has granted to us in this letter agreement. Also Panatrade Shipping and
Management S.A., a company affiliated with Cardiff owns a Capesize drybulk
carrier. These vessels could be in competition with our fleet and Cardiff and
other companies affiliated with Cardiff might be faced with conflicts of
interest with respect to their own interests and their obligations to us.
We cannot assure you that our board of directors will declare dividends.
Our current dividend policy is to declare quarterly distributions to
stockholders of $0.20 per share by each January, April, July and October. The
payment of dividends will be subject at all times to the discretion of our board
of directors. The timing and amount of dividends will depend on our earnings,
financial condition, cash requirements and availability, restrictions in our
loan agreements, the provisions of Marshall Islands law affecting the payment of
dividends and other factors. Marshall Islands laws generally prohibit the
payment of dividends other than from surplus or while a company is insolvent or
would be rendered insolvent upon the payment of such dividends.
We may incur expenses or liabilities or be subject to other circumstances in the
future that reduce or eliminate the amount of cash that we have available for
distribution as dividends, including as a result of the risks described in this
prospectus. Our growth strategy contemplates that we will finance the
acquisition of additional vessels through a combination of debt and equity
financing on terms acceptable to us. If financing is not available to us on
acceptable terms, our board of directors may determine to finance or refinance
acquisitions with cash from operations, which would reduce or even eliminate the
amount of cash available for the payment of dividends. We can give no assurance
that dividends will be paid in accordance with our dividend policy or at all.
We may have difficulty managing our planned growth properly.
We intend to continue to grow our fleet. Our growth will depend on:
o locating and acquiring suitable vessels;
o identifying and consummating acquisitions or joint ventures;
o integrating any acquired business successfully with our existing
operations;
o enhancing our customer base;
o managing expansion; and
o obtaining required financing.
Growing any business by acquisition presents numerous risks such as undisclosed
liabilities and obligations, difficulty in obtaining additional qualified
personnel, managing relationships with customers and suppliers and integrating
newly acquired operations into existing infrastructures. We cannot give any
assurance that we will be successful in executing our growth plans or that we
will not incur significant expenses and losses in connection therewith.
Our credit facilities impose operating and financial restrictions on us. These
restrictions limit our ability to, among other things:
o pay dividends or make capital expenditures if we do not repay amounts
drawn under the credit facilities, if there is a default under the
credit facilities or if the payment of the dividend or capital
expenditure would result in a default or breach of a loan covenant;
o incur additional indebtedness, including through the issuance of
guarantees;
o change the flag, class or management of our vessels;
o create liens on our assets;
o sell our vessels;
o enter into a time charter or consecutive voyage charters that have a
term that exceeds, or which by virtue of any optional extensions may
exceed, thirteen months;
o merge or consolidate with, or transfer all or substantially all our
assets to, another person; and
o enter into a new line of business.
Therefore, we will have to seek permission from our lenders in order to engage
in some corporate actions. Our lenders' interests may be different from ours and
yours, and we cannot guarantee that we will be able to obtain our lenders'
permission when needed. This may limit our ability to pay dividends to you,
finance our future operations, make acquisitions or pursue business
opportunities.
Our loan agreements may prohibit or impose certain conditions on the payment of
dividends.
Under our new credit facility we are restricted in our payments of dividends.
During 2006 dividend payments may not exceed $18.0 million; however we may
request our lender's consent for additional dividend payments. Thereafter
dividend payments are not to exceed 50% of net income as evidenced by the
relevant annual audited financial statements.
Purchasing and operating secondhand vessels may result in increased operating
costs and reduced fleet utilization.
While we have the right to inspect previously owned vessels prior to our
purchase of them, such an inspection does not provide us with the same knowledge
about their condition that we would have if these vessels had been built for and
operated exclusively by us. Generally, we do not receive the benefit of
warranties on secondhand vessels. A secondhand vessel may have conditions or
defects that were not known to us when we purchased the vessel and which may
require us to make costly repairs to the vessel. These repairs may require us to
put a vessel into dry-dock which would reduce our fleet utilization.
In the highly competitive international shipping industry, we may not be able to
compete for charters with new entrants or established companies with greater
resources.
We employ our vessels in a highly competitive market that is capital intensive
and highly fragmented. Competition arises primarily from other vessel owners,
some of whom have substantially greater resources than we do. Competition for
the transportation of dry bulk cargo by sea is intense and depends on price,
location, size, age, condition and the acceptability of the vessel and its
operators to the charterers. Due in part to the highly fragmented market,
competitors with greater resources could enter the dry bulk shipping industry
and operate larger fleets through consolidations or acquisitions and may be able
to offer lower charter rates and higher quality vessels than we are able to
offer.
We may be unable to attract and retain key management personnel and other
employees in the shipping industry, which may negatively impact the
effectiveness of our management and results of operations.
Our success depends to a significant extent upon the abilities and efforts of
our management team and our ability to hire and retain key members of our
management team. The loss of any of these individuals, difficulty in hiring and
retaining personnel could adversely affect our business prospects, financial
condition and results of operations. We have entered into employment contracts
with our Chairman and Chief Executive Officer, George Economou, and our Chief
Financial Officer, Christopher Thomas. We do not currently, nor do we intend to,
maintain "key man" life insurance on any of our officers.
Risks associated with operating ocean-going vessels could affect our business
and reputation, which could adversely affect our revenues and stock price.
The operation of ocean-going vessels carries inherent risks. These risks include
the possibility of:
o marine disaster;
o environmental accidents;
o cargo and property losses or damage;
o business interruptions caused by mechanical failure, human error, war,
terrorism, political action in various countries, labor strikes or
adverse weather conditions; and
o piracy.
Any of these circumstances or events could increase our costs or lower our
revenues. The involvement of our vessels in an environmental disaster may harm
our reputation as a safe and reliable vessel owner and operator.
The shipping industry has inherent operational risks that may not be adequately
covered by our insurance.
We procure insurance for our fleet against risks commonly insured against by
vessel owners and operators. Our current insurance includes hull and machinery
insurance, war risks insurance and protection and indemnity insurance (which
include environmental damage and pollution insurance). We can give no assurance
that we are adequately insured against all risks or that our insurers will pay a
particular claim. Even if our insurance coverage is adequate to cover our
losses, we may not be able to timely obtain a replacement vessel in the event of
a loss.
Furthermore, in the future, we may not be able to obtain adequate insurance
coverage at reasonable rates for our fleet. We may also be subject to calls, or
premiums, in amounts based not only on our own claim records but also the claim
records of all other members of the protection and indemnity associations
through which we receive indemnity insurance coverage for tort liability. Our
insurance policies also contain deductibles, limitations and exclusions which,
although we believe are standard in the shipping industry, may nevertheless
increase our costs.
The aging of our fleet may result in increased operating costs in the future,
which could adversely affect our earnings.
In general, the cost of maintaining a vessel in good operating condition
increases with the age of the vessel. As of December 31, 2005, the twenty seven
vessels in our operating fleet had an average age of 11 years. As our fleet
ages, we will incur increased costs. Older vessels are typically less fuel
efficient and more costly to maintain than more recently constructed vessels due
to improvements in engine technology. Cargo insurance rates increase with the
age of a vessel, making older vessels less desirable to charterers. Governmental
regulations and safety or other equipment standards related to the age of
vessels may also require expenditures for alterations or the addition of new
equipment to our vessels and may restrict the type of activities in which our
vessels may engage. We cannot assure you that, as our vessels age, market
conditions will justify those expenditures or enable us to operate our vessels
profitably during the remainder of their useful lives.
We may have to pay tax on United States source income, which would reduce our
earnings.
Under the United States Internal Revenue Code of 1986, or the Code, 50% of the
gross shipping income of a vessel owning or chartering corporation, such as
ourselves and our subsidiaries, that is attributable to transportation that
begins or ends, but that does not both begin and end, in the United States is
characterized as United States source shipping income and such income is subject
to a 4% United States federal income tax without allowance for any deductions,
unless that corporation qualifies for exemption from tax under Section 883 of
the Code and the Treasury Regulations promulgated thereunder in August of 2003
and effective for calendar year taxpayers such as us on January 1, 2005.
For the fiscal year 2005, the Company qualified for the exemption from U.S. tax
on its international shipping operation based on its satisfaction of the country
of organization test and the Publicly Traded Test, in each case in accordance
with the applicable regulations.
If we or our subsidiaries are not entitled to this exemption under Section 883
for any taxable year, we or our subsidiaries would be subject for those years to
a 4% United States federal income tax on our U.S.-source shipping income. The
imposition of this taxation could have a negative effect on our business and
would result in decreased earnings available for distribution to our
shareholders. For the 2005 taxable year, we estimate that our maximum United
States federal income tax liability would be $0.5 million if we were to be
subject to this taxation.
Our vessels may suffer damage and we may face unexpected drydocking costs, which
could adversely affect our cash flow and financial condition.
If our vessels suffer damage, they may need to be repaired at a drydocking
facility. The costs of drydock repairs are unpredictable and can be substantial.
The loss of earnings while our vessels are being repaired and repositioned, as
well as the actual cost of these repairs, would decrease our earnings and reduce
the amount of cash that we have available for dividends. We may not have
insurance that is sufficient to cover all or any of these costs or losses and
may have to pay drydocking costs not covered by our insurance.
We are a holding company, and we depend on the ability of our subsidiaries to
distribute funds to us in order to satisfy our financial obligations and to make
dividend payments.
We are a holding company and our subsidiaries conduct all of our operations and
own all of our operating assets. We have no significant assets other than the
equity interests in our subsidiaries. As a result, our ability to make dividend
payments depends on our subsidiaries and their ability to distribute funds to
us. If we are unable to obtain funds from our subsidiaries, our board of
directors may exercise its discretion not to declare or pay dividends. We do not
intend to obtain funds from other sources to pay dividends.
As we expand our business, we may need to improve our operating and financial
systems and will need to recruit suitable employees and crew for our vessels.
Our current operating and financial systems may not be adequate as we implement
our plan to expand the size of our fleet and our attempts to improve those
systems may be ineffective. In addition, as we expand our fleet, we will need to
recruit suitable additional seafarers and shore side administrative and
management personnel. While we have not experienced any difficulty in recruiting
to date, we cannot guarantee that we will be able to continue to hire suitable
employees as we expand our fleet. If we or our crewing agent encounters business
or financial difficulties, we may not be able to adequately staff our vessels.
If we are unable to grow our financial and operating systems or to recruit
suitable employees as we expand our fleet, our financial performance may be
adversely affected and, among other things, the amount of cash available for
distribution as dividends to our stockholders may be reduced.
To service our indebtedness, we will require a significant amount of cash. Our
ability to generate cash depends on many factors beyond our control.
Our ability to make payments on and to refinance our indebtedness, including the
principal, premium, if any, interest or other amounts due on any debt securities
that we may issue, and to fund our operations, will depend on our ability to
generate cash in the future, which, to a certain extent, is subject to general
economic, financial, competitive, legislative, regulatory and other factors that
are beyond our control. We cannot assure you that our business will generate
sufficient cash flow from operations, that currently anticipated business
opportunities will be realized on schedule or at all or that future borrowings
will be available to us in amounts sufficient to enable us to service our
indebtedness, including the principal, premium, if any, interest or other
amounts due on any debt securities that we may issue, or to fund our other
liquidity needs.
If we cannot service our debt, we will have to take actions such as reducing or
delaying capital investments, selling assets, restructuring or refinancing our
debt or seeking additional equity capital. We cannot assure you that any of
these remedies could, if necessary, be effected on commercially reasonable
terms, or at all. In addition, the indenture governing any debt securities that
we may issue and our loan agreements may restrict us from adopting any of these
alternatives. Because of these and other factors beyond our control, we may be
unable to service our indebtedness.
USE OF PROCEEDS
Unless we specify otherwise in any prospectus supplement, we will use the net
proceeds from the sale of securities offered by this prospectus for capital
expenditures, repayment of indebtedness, working capital, to make vessel
acquisitions and for general corporate purposes.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This document includes assumptions, expectations, projections, intentions
and beliefs about future events. These statements are intended as
"forward-looking statements." We caution that assumptions, expectations,
projections, intentions and beliefs about future events may and often do vary
from actual results and the differences can be material.
All statements in this document that are not statements of historical fact
are forward-looking statements. Forward-looking statements include, but are not
limited to, such matters as:
o future operating or financial results;
o statements about planned, pending or recent acquisitions, business
strategy and expected capital spending or operating expenses,
including drydocking and insurance costs;
o statements about drybulk shipping market trends, including charter
rates and factors affecting supply and demand;
o our ability to obtain additional financing;
o expectations regarding the availability of vessel acquisitions; and
o anticipated developments with respect to pending litigation.
The forward-looking statements in this document are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, management's examination of historical operating
trends, data contained in our records and other data available from third
parties. Although DryShips Inc. believes that these assumptions were reasonable
when made, because these assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible to predict and
are beyond our control, DryShips Inc. cannot assure you that it will achieve or
accomplish these expectations, beliefs or projections described in the forward
looking statements contained in this report.
Important factors that, in our view, could cause actual results to differ
materially from those discussed in the forward-looking statements include the
strength of world economies and currencies, general market conditions, including
changes in charter rates and vessel values, failure of a seller to deliver one
or more vessels, failure of a buyer to accept delivery of a vessel, inability to
procure acquisition financing, default by one or more charterers of our ships,
changes in demand for drybulk commodities, changes in demand that may affect
attitudes of time charterers, scheduled and unscheduled drydocking, changes in
DryShips Inc.'s voyage and operating expenses, including bunker prices,
dry-docking and insurance costs, changes in governmental rules and regulations,
potential liability from pending or future litigation, domestic and
international political conditions, potential disruption of shipping routes due
to accidents, international hostilities and political events or acts by
terrorists.
When used in this document, the words "anticipate," "estimate," "project,"
"forecast," "plan," "potential," "will," "may," "should," and "expect" reflect
forward-looking statements.
RATIO OF EARNINGS TO FIXED CHARGES
Effective November 1, 2004, we changed our fiscal reporting year-end from
October 31st to December 31st. The following table sets forth our unaudited
ratio of earnings to fixed charges for the fiscal years ended October 31, 2001,
2002, 2003 and 2004, the two-month period ended December 31, 2004 and the fiscal
year ended December 31, 2005 (1).
2-month
period Year
Ended Ended
Year Ended October 31, December December
2001 2002 2003 2004 31, 2004 31, 2005
-------- --------- --------- --------- ------------ -------------
(in thousands of US dollars)
Earnings
Net Income (loss).................... $ 5,835 $ (611) $ 7,189 $ 39,113 $ 10,713 $ 111,017
Add: Fixed charges................... 2,001 951 896 1,410 368 20,341
-------- -------- ------- -------- -------- ----------
Total Earnings....................... $ 7,836 $ 340 $ 8,085 $ 40,523 $ 11,081 $ 131,358
======== ======= ======= ======== ======== ==========
Fixed Charges
Interest expense..................... 1,967 913 758 1,278 257 19,797
Amortization and write-off of
capitalized expenses relating to 34 38 138 132 111 544
indebtedness..........................
-------- -------- ------- -------- -------- ----------
Total Fixed Charges.................. $ 2,001 $ 951 $ 896 $ 1,410 $ 368 $ 20,341
======== ======= ======= ======== ======== ==========
Ratio of Earnings to Fixed Charges 3.9x 0.4x 9.0x 28.7x 30.1x 6.5x
Dollar Amount of Deficiency in Earnings
to Fixed Charges n/a $ 611 n/a n/a n/a n/a
(1) We have not issued any preferred stock as of the date of this prospectus.
----------
For purposes of computing the consolidated ratio of earnings to fixed
charges, earnings consist of net income plus interest expense and amortization
and write-off of capitalized expenses relating to indebtedness. Fixed charges
consist of interest expense and amortization and write-off of capitalized
expenses relating to indebtedness.
CAPITALIZATION
A prospectus supplement will include information on the Company's
consolidated capitalization.
PLAN OF DISTRIBUTION
We may sell or distribute the securities included in this prospectus
through underwriters, through agents, to dealers, in private transactions, at
market prices prevailing at the time of sale, at prices related to the
prevailing market prices, or at negotiated prices.
In addition, we may sell some or all of the securities included in this
prospectus through:
o a block trade in which a broker-dealer may resell a portion of the
block, as principal, in order to facilitate the transaction;
o purchases by a broker-dealer, as principal, and resale by the
broker-dealer for its account; or
o ordinary brokerage transactions and transactions in which a broker
solicits purchasers.
In addition, we may enter into option or other types of transactions that
require us to deliver common stock to a broker-dealer, who will then resell or
transfer the common stock under this prospectus.
We may enter into hedging transactions with respect to our securities. For
example, we may:
o enter into transactions involving short sales of our common stock by
broker-dealers;
o sell shares of common stock short themselves and deliver the shares to
close out short positions;
o enter into option or other types of transactions that require us to
deliver shares of common stock to a broker-dealer, who will then
resell or transfer the shares under this prospectus; or
o loan or pledge shares of common stock to a broker-dealer, who may sell
the loaned shares or, in the event of default, sell the pledged
shares.
The Company may enter into derivative transactions with third parties, or
sell securities not covered by this prospectus to third parties in privately
negotiated transactions. If the applicable prospectus supplement indicates, in
connection with those derivatives, the third parties (or affiliates of such
third parties) may sell securities covered by this prospectus and the applicable
prospectus supplement, including in short sale transactions. If so, the third
party (or affiliates of such third parties) may use securities pledged by us or
borrowed from us or others to settle those sales or to close out any related
open borrowings of stock, and may use securities received from us in settlement
of those derivatives to close out any related open borrowings of stock. The
third party (or affiliates of such third parties) in such sale transactions will
be an underwriter and, if not identified in this prospectus, will be identified
in the applicable prospectus supplement. In addition, we may otherwise loan or
pledge securities to a financial institution or other third party that in turn
may sell the securities short using this prospectus. Such financial institution
or other third party may transfer its economic short position to investors in
our securities or in connection with a concurrent offering of other securities.
We may loan or pledge securities to a financial institution or other third
party that in turn may sell the securities using this prospectus. Such financial
institution or third party may transfer its short position to investors in our
securities or in connection with a simultaneous offering of other securities
offered by this prospectus.
Any broker-dealers or other persons acting on our behalf that participate
with us in the distribution of the shares may be deemed to be underwriters and
any commissions received or profit realized by them on the resale of the shares
may be deemed to be underwriting discounts and commissions under the Securities
Act of 1933, as amended, or the Securities Act.
At the time that any particular offering of securities is made, to the
extent required by the Securities Act, a prospectus supplement will set forth
the terms of the offering, including the aggregate number of securities being
offered, the purchase price of the securities, the initial offering price of the
securities, the names of any underwriters, dealers or agents, any discounts,
commissions and other items constituting compensation from us and any discounts,
commissions or concessions allowed or reallowed or paid to dealers.
Underwriters and agents in any distribution contemplated hereby, including
but not limited to at-the-market equity offerings, may from time to time include
Cantor Fitzgerald & Co, or CF&Co. Such sales by CF&Co., if any, will be made
pursuant to the terms of a Sales Agreement between us and CF&Co. Underwriters or
agents could make sales in negotiated transactions at market prices prevailing
at the time of sale or at prices related to such prevailing market prices and/or
any other method permitted by law, including sales deemed to be an at-the-market
offering as defined in Rule 415 promulgated under the Securities Act, which
includes sales made directly on or through Nasdaq, the existing trading market
for our common stock, sales made to or through a market maker other than on an
exchange or otherwise.
Certain persons participating in any offering of securities may engage in
transactions that stabilize, maintain or otherwise affect the price of the
securities offered. In connection with any such offering, the underwriters or
agents, as the case may be, may purchase and sell securities in the open market.
These transactions may include overallotment and stabilizing transactions,
purchases to cover syndicate short positions created in connection with the
offering and passive market making. Stabilizing transactions consist of certain
bids or purchases for the purpose of preventing or retarding a decline in the
market price of the securities and syndicate short positions involve the sale by
the underwriters or agents, as the case may be, of a greater number of
securities than they are required to purchase from us in the offering. The
underwriters may also impose a penalty bid, whereby selling concessions allowed
to syndicate members or other broker-dealers for the securities sold for their
account may be reclaimed by the syndicate if such securities are repurchased by
the syndicate in stabilizing or covering transactions. In passive market making,
market makers in the shares of common stock who are underwriters or prospective
underwriters may, subject to certain limitations, make bids for or purchases of
the shares of common stock until the time, if any, at which a stabilizing bid is
made. These activities may stabilize, maintain or otherwise affect the market
price of the securities, which may be higher than the price that might otherwise
prevail in the open market, and if commenced, may be discontinued at any time.
We will bear costs relating to all of the securities being registered under
this Registration Statement.
Pursuant to a requirement by the National Association of Securities
Dealers, Inc., or NASD, the maximum commission or discount to be received by any
NASD member or independent broker/dealer may not be greater than eight percent
(8%) of the gross proceeds received by us for the sale of any securities being
registered pursuant to SEC Rule 415 under the Securities Act.
ENFORCEMENT OF CIVIL LIABILITIES
DryShips Inc. is a Marshall Islands company and our executive offices are
located outside of the U.S. in Athens, Greece. A majority of our directors,
officers and the experts named in the prospectus reside outside the U.S. In
addition, a substantial portion of our assets and the assets of our directors,
officers and experts are located outside of the U.S. As a result, you may have
difficulty serving legal process within the U.S. upon us or any of these
persons. You may also have difficulty enforcing, both in and outside the U.S.,
judgments you may obtain in U.S. courts against us or these persons in any
action, including actions based upon the civil liability provisions of U.S.
federal or state securities laws.
Furthermore, there is substantial doubt that the courts of the Marshall
Islands or Greece would enter judgments in original actions brought in those
courts predicated on U.S. federal or state securities laws.
DESCRIPTION OF CAPITAL STOCK
Authorized and Outstanding Capital Stock
Under our articles of incorporation we are authorized to issue 75,000,000
shares with par value $.01 per share, of which 30,350,000 shares are issued and
outstanding as of April 20, 2006. We are authorized, without further vote or
action by the shareholders, to issue 30,000,000 registered preferred shares with
a par value of $0.01, none of which has been issued as of April 20, 2006. The
Board of Directors shall have the authority to establish such series of
preferred shares and with such designations, preferences and relative,
participating, optional or special rights and qualifications, limitations or
restrictions as shall be stated in the resolutions providing for the issue of
such preferred shares.
Share History
In October 2004, we issued 15,400,000 shares of our common stock to the
Entrepreneurial Spirit Foundation, or the Foundation, as consideration for the
contribution to us of all of the issued and outstanding capital stock of six of
our subsidiaries. The Foundation is a foundation organized under the laws of
Lichtenstein and is controlled by our Chairman and Chief Executive Officer Mr.
George Economou. Subsequent to the issuance of the 15,400,000 shares discussed
above and prior to the completion of our initial public offering discussed
below, the Foundation trasferred (i) 2,772,000 shares of common stock to Advice
Investments S.A., a corporation organized under the Republic of Liberia, all the
issued and outstanding capital stock of which is owned by Ms. Elisavet Manola of
Athens, Greece, the wife of Mr. Economou and (ii) 1,848,000 shares of common
stock to Magic Management Inc., all of the issued and outstanding capital stock
of which is owned by Ms. Rika Vosniadou of Athens, Greece, the ex-wife of Mr.
Economou. In February 2005, we issued 14,950,000 shares of common stock in
connection with our initial public offering. On February 14, 2006, the
Foundation transferred all of its shares to its wholly-owned subsidiary, Elios
Investments.
Description of Common Stock
Each outstanding share of common stock entitles the holder to one vote on
all matters submitted to a vote of stockholders. Subject to preferences that may
be applicable to any outstanding shares of preferred stock, holders of shares of
common stock are entitled to receive ratably all dividends, if any, declared by
our board of directors out of funds legally available for dividends. Holders of
common stock do not have conversion, redemption or preemptive rights to
subscribe to any of our securities. The rights, preferences and privileges of
holders of common stock are subject to the rights of the holders of any shares
of preferred stock which we may issue in the future. Our common stock is quoted
on The Nasdaq National Market under the symbol "DRYS."
Our Articles of Incorporation and Bylaws
Our purpose is to engage in any lawful act or activity for which
corporations may now or hereafter be organized under the Marshall Islands
Business Corporations Act. Our articles of incorporation and bylaws do not
impose any limitations on the ownership rights of our shareholders.
Under our bylaws, annual shareholder meetings will be held at a time and
place selected by our board of directors. The meetings may be held in or outside
of the Marshall Islands. Special meetings may be called by the Board of
Directors, or by the Chairman of the Board, or by the President. Our board of
directors may set a record date between 15 and 60 days before the date of any
meeting to determine the shareholders that will be eligible to receive notice
and vote at the meeting.
Directors
Our directors are elected by a plurality of the votes cast at a meeting of
the shareholders by the holders of shares entitled to vote in the election.
There is no provision for cumulative voting.
The board of directors may change the number of directors only by a vote of
at least two-thirds of the entire board. Each director shall be elected to serve
until his successor shall have been duly elected and qualified, except in the
event of his death, resignation, removal, or the earlier termination of his term
of office. The board of directors has the authority to fix the amounts which
shall be payable to the members of our board of directors for attendance at any
meeting or for services rendered to us.
Dividends
While we cannot assure you that we will continue to do so, and subject to
the limitations discussed below, we currently intend to pay regular cash
dividends on our common stock on a quarterly basis. We paid a quarterly dividend
of $0.20 per share to holders of our common stock in May and September 2005.
Under our new credit facility we are restricted in our payments of dividends.
During 2006 dividend payments may not exceed $18.0 million; however we may
request our lender's consent for additional dividend payments. Thereafter
dividend payments are not to exceed 50% of net income as evidenced by the
relevant annual audited financial statements.
Declaration and payment of any dividend is subject to the discretion of our
board of directors. The timing and amount of dividend payments will be dependent
upon our earnings, financial condition, cash requirements and availability,
restrictions in our loan agreements, the provisions of Marshall Islands law
affecting the payment of distributions to shareholders and other factors. The
payment of dividends is not guaranteed or assured, and may be discontinued at
any time at the discretion of our Board of Directors. Because we are a holding
company with no material assets other than the stock of our subsidiaries, our
ability to pay dividends will depend on the earnings and cash flow of our
subsidiaries and their ability to pay dividends to us. If there is a substantial
decline in the drybulk charter market, our earnings would be negatively affected
thus limiting our ability to pay dividends. Marshall Islands law generally
prohibits the payment of dividends other than from surplus or while a company is
insolvent or would be rendered insolvent upon the payment thereof.
Dissenters' Rights of Appraisal and Payment
Under the Business Corporation Act of the Republic of the Marshall Islands,
or BCA, our shareholders have the right to dissent from various corporate
actions, including any merger or sale of all or substantially all of our assets
not made in the usual course of our business, and receive payment of the fair
value of their shares. In the event of any further amendment of the articles, a
shareholder also has the right to dissent and receive payment for his or her
shares if the amendment alters certain rights in respect of those shares. The
dissenting shareholder must follow the procedures set forth in the BCA to
receive payment. In the event that we and any dissenting shareholder fail to
agree on a price for the shares, the BCA procedures involve, among other things,
the institution of proceedings in the circuit court in the judicial circuit in
the Marshall Islands in which our Marshall Islands office is situated. The value
of the shares of the dissenting shareholder is fixed by the court after
reference, if the court so elects, to the recommendations of a court-appointed
appraiser.
Shareholders' Derivative Actions
Under the BCA, any of our shareholders may bring an action in our name to
procure a judgment in our favor, also known as a derivative action, provided
that the shareholder bringing the action is a holder of common stock both at the
time the derivative action is commenced and at the time of the transaction to
which the action relates.
Anti-takeover Provisions of our Charter Documents
Several provisions of our articles of incorporation and by-laws may have
anti-takeover effects. These provisions are intended to avoid costly takeover
battles, lessen our vulnerability to a hostile change of control and enhance the
ability of our board of directors to maximize shareholder value in connection
with any unsolicited offer to acquire us. However, these anti-takeover
provisions, which are summarized below, could also discourage, delay or prevent
(1) the merger or acquisition of our company by means of a tender offer, a proxy
contest or otherwise, that a shareholder may consider in its best interest and
(2) the removal of incumbent officers and directors.
Blank Check Preferred Stock
Under the terms of our articles of incorporation, our board of directors
has authority, without any further vote or action by our shareholders, to issue
up to 30 million shares of blank check preferred stock. Our board of directors
may issue shares of preferred stock on terms calculated to discourage, delay or
prevent a change of control of our company or the removal of our management.
Classified Board of Directors
Our articles of incorporation provide for a board of directors serving
staggered, three-year terms. Approximately one-third of our board of directors
will be elected each year. This classified board provision could discourage a
third party from making a tender offer for our shares or attempting to obtain
control of our company. It could also delay shareholders who do not agree with
the policies of the board of directors from removing a majority of the board of
directors for two years.
Election and Removal of Directors
Our articles of incorporation and by-laws prohibit cumulative voting in the
election of directors. Our by-laws require parties other than the board of
directors to give advance written notice of nominations for the election of
directors. Our by-laws also provide that our directors may be removed only for
cause and only upon the affirmative vote of the holders of at least two-thirds
of the outstanding shares of our capital stock entitled to vote for those
directors. These provisions may discourage, delay or prevent the removal of
incumbent officers and directors.
Limited Actions by Shareholders
Our articles of incorporation and our by-laws provide that any action
required or permitted to be taken by our shareholders must be effected at an
annual or special meeting of shareholders or by the unanimous written consent of
our shareholders. Our by-laws provide that only our Board of Directors, or our
Chairman of the Board, or our President may call special meetings of our
shareholders and the business transacted at the special meeting is limited to
the purposes stated in the notice.
DESCRIPTION OF PREFERRED SHARES
Under the terms of our articles of incorporation, our board of directors
has authority, without any further vote or action by our shareholders, to issue
up to 30,000,000 shares of blank check preferred stock. Our board of directors
may issue shares of preferred stock on terms calculated to discourage, delay or
prevent a change of control of our company or the removal of our management. The
material terms of any series of preferred shares that we offer through a
prospectus supplement will be described in that prospectus supplement. Our board
of directors is authorized to provide for the issuance of preferred shares in
one or more series with designations as may be stated in the resolution or
resolutions providing for the issue of such preferred shares. At the time that
any series of our preferred shares are authorized, our board of directors will
fix the dividend rights, any conversion rights, any voting rights, redemption
provisions, liquidation preferences and any other rights, preferences,
privileges and restrictions of that series, as well as the number of shares
constituting that series and their designation. Our board of directors could,
without shareholder approval, cause us to issue preferred stock which has
voting, conversion and other rights that could adversely affect the holders of
our ordinary shares or make it more difficult to effect a change in control. Our
preferred shares could be used to dilute the share ownership of persons seeking
to obtain control of us and thereby hinder a possible takeover attempt which, if
our shareholders were offered a premium over the market value of their shares,
might be viewed as being beneficial to our shareholders. In addition, our
preferred shares could be issued with voting, conversion and other rights and
preferences which would adversely affect the voting power and other rights of
holders of our ordinary shares. The material terms of any series of preferred
shares that we offer through a prospectus supplement will be described in that
prospectus supplement.
DESCRIPTION OF WARRANTS
We may issue warrants to purchase our debt or equity securities or
securities of third parties or other rights, including rights to receive payment
in cash or securities based on the value, rate or price of one or more specified
commodities, currencies, securities or indices, or any combination of the
foregoing. Warrants may be issued independently or together with any other
securities and may be attached to, or separate from, such securities. Each
series of warrants will be issued under a separate warrant agreement to be
entered into between us and a warrant agent. The terms of any warrants to be
issued and a description of the material provisions of the applicable warrant
agreement will be set forth in the applicable prospectus supplement.
The applicable prospectus supplement will describe the following terms of
any warrants in respect of which this prospectus is being delivered:
o the title of such warrants;
o the aggregate number of such warrants;
o the price or prices at which such warrants will be issued;
o the currency or currencies, in which the price of such warrants will
be payable;
o the securities or other rights, including rights to receive payment in
cash or securities based on the value, rate or price of one or more
specified commodities, currencies, securities or indices, or any
combination of the foregoing, purchasable upon exercise of such
warrants;
o the price at which and the currency or currencies, in which the
securities or other rights purchasable upon exercise of such warrants
may be purchased;
o the date on which the right to exercise such warrants shall commence
and the date on which such right shall expire;
o if applicable, the minimum or maximum amount of such warrants which
may be exercised at any one time;
o if applicable, the designation and terms of the securities with which
such warrants are issued and the number of such warrants issued with
each such security;
o if applicable, the date on and after which such warrants and the
related securities will be separately transferable;
o information with respect to book-entry procedures, if any;
o if applicable, a discussion of any material United States Federal
income tax considerations; and
o any other terms of such warrants, including terms, procedures and
limitations relating to the exchange and exercise of such warrants.
DESCRIPTION OF DEBT SECURITIES
We may issue debt securities from time to time in one or more series, under
one or more indentures, each dated as of a date on or prior to the issuance of
the debt securities to which it relates. We may issue senior debt securities and
subordinated debt securities pursuant to separate indentures, a senior indenture
and a subordinated indenture, respectively, in each case between us and the
trustee named in the indenture. These indentures will be filed either as
exhibits to an amendment to this Registration Statement or a prospectus
supplement, or as an exhibit to a Securities Exchange Act of 1934, or Exchange
Act, report that will be incorporated by reference to the Registration Statement
or a prospectus supplement. We will refer to any or all of these reports as
"subsequent filings". The senior indenture and the subordinated indenture, as
amended or supplemented from time to time, are sometimes referred to
individually as an "indenture" and collectively as the "indentures". Each
indenture will be subject to and governed by the Trust Indenture Act. The
aggregate principal amount of debt securities which may be issued under each
indenture will be unlimited and each indenture will contain the specific terms
of any series of debt securities or provide that those terms must be set forth
in or determined pursuant to, an authorizing resolution, as defined in the
applicable prospectus supplement, and/or a supplemental indenture, if any,
relating to such series.
Certain of our subsidiaries may guarantee the debt securities we offer.
Those guarantees may or may not be secured by liens, mortgages, and security
interests in the assets of those subsidiaries. The terms and conditions of any
such subsidiary guarantees, and a description of any such liens, mortgages or
security interests, will be set forth in the prospectus supplement that will
accompany this prospectus.
Our statements below relating to the debt securities and the indentures are
summaries of their anticipated provisions, are not complete and are subject to,
and are qualified in their entirety by reference to, all of the provisions of
the applicable indenture and any applicable U.S. federal income tax
consideration as well as any applicable modifications of or additions to the
general terms described below in the applicable prospectus supplement or
supplemental indenture.
General
Neither indenture limits the amount of debt securities which may be issued,
and each indenture provides that debt securities may be issued up to the
aggregate principal amount from time to time. The debt securities may be issued
in one or more series. The senior debt securities will be unsecured and will
rank on a parity with all of our other unsecured and unsubordinated
indebtedness. Each series of subordinated debt securities will be unsecured and
subordinated to all present and future senior indebtedness of debt securities
will be described in an accompanying prospectus supplement.
You should read the subsequent filings relating to the particular series of
debt securities for the following terms of the offered debt securities:
o the designation, aggregate principal amount and authorized
denominations;
o the issue price, expressed as a percentage of the aggregate principal
amount;
o the maturity date;
o the interest rate per annum, if any;
o if the offered debt securities provide for interest payments, the date
from which interest will accrue, the dates on which interest will be
payable, the date on which payment of interest will commence and the
regular record dates for interest payment dates;
o any optional or mandatory sinking fund provisions or conversion or
exchangeability provisions;
o the date, if any, after which and the price or prices at which the
offered debt securities may be optionally redeemed or must be
mandatorily redeemed and any other terms and provisions of optional or
mandatory redemptions;
o if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which offered debt securities of the
series will be issuable;
o if other than the full principal amount, the portion of the principal
amount of offered debt securities of the series which will be payable
upon acceleration or provable in bankruptcy;
o any events of default not set forth in this prospectus;
o the currency or currencies, including composite currencies, in which
principal, premium and interest will be payable, if other than the
currency of the United States of America;
o if principal, premium or interest is payable, at our election or at
the election of any holder, in a currency other than that in which the
offered debt securities of the series are stated to be payable, the
period or periods within which, and the terms and conditions upon
which, the election may be made;
o whether interest will be payable in cash or additional securities at
our or the holder's option and the terms and conditions upon which the
election may be made;
o if denominated in a currency or currencies other than the currency of
the United States of America, the equivalent price in the currency of
the United States of America for purposes of determining the voting
rights of holders of those debt securities under the applicable
indenture;
o if the amount of payments of principal, premium or interest may be
determined with reference to an index, formula or other method based
on a coin or currency other than that in which the offered debt
securities of the series are stated to be payable, the manner in which
the amounts will be determined;
o any restrictive covenants or other material terms relating to the
offered debt securities, which may not be inconsistent with the
applicable indenture;
o whether the offered debt securities will be issued in the form of
global securities or certificates in registered or bearer form;
o any terms with respect to subordination;
o any listing on any securities exchange or quotation system;
o additional provisions, if any, related to defeasance and discharge of
the offered debt securities; and
o the applicability of any guarantees.
Unless otherwise indicated in subsequent filings with the Commission
relating to the indenture, principal, premium and interest will be payable and
the debt securities will be transferable at the corporate trust office of the
applicable trustee. Unless other arrangements are made or set forth in
subsequent filings or a supplemental indenture, principal, premium and interest
will be paid by checks mailed to the holders at their registered addresses.
Unless otherwise indicated in subsequent filings with the Commission, the
debt securities will be issued only in fully registered form without coupons, in
denominations of $1,000 or any integral multiple thereof. No service charge will
be made for any transfer or exchange of the debt securities, but we may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection with these debt securities.
Some or all of the debt securities may be issued as discounted debt
securities, bearing no interest or interest at a rate which at the time of
issuance is below market rates, to be sold at a substantial discount below the
stated principal amount. United States federal income consequences and other
special considerations applicable to any discounted securities will be described
in subsequent filings with the Commission relating to those securities.
We refer you to applicable subsequent filings with respect to any deletions
or additions or modifications from the description contained in this prospectus.
Senior Debt
We will issue senior debt securities under the senior debt indenture. These
senior debt securities will rank on an equal basis with all our other unsecured
debt except subordinated debt.
Subordinated Debt
We will issue subordinated debt securities under the subordinated debt
indenture. Subordinated debt will rank subordinate and junior in right of
payment, to the extent set forth in the subordinated debt indenture, to all our
senior debt (both secured and unsecured).
In general, the holders of all senior debt are first entitled to receive
payment of the full amount unpaid on senior debt before the holders of any of
the subordinated debt securities are entitled to receive a payment on account of
the principal or interest on the indebtedness evidenced by the subordinated debt
securities in certain events.
If we default in the payment of any principal of, or premium, if any, or
interest on any senior debt when it becomes due and payable after any applicable
grace period, then, unless and until the default is cured or waived or ceases to
exist, we cannot make a payment on account of or redeem or otherwise acquire the
subordinated debt securities.
If there is any insolvency, bankruptcy, liquidation or other similar
proceeding relating to us or our property, then all senior debt must be paid in
full before any payment may be made to any holders of subordinated debt
securities.
Furthermore, if we default in the payment of the principal of and accrued
interest on any subordinated debt securities that is declared due and payable
upon an event of default under the subordinated debt indenture, holders of all
our senior debt will first be entitled to receive payment in full in cash before
holders of such subordinated debt can receive any payments.
Senior debt means:
o the principal, premium, if any, interest and any other amounts owing
in respect of our indebtedness for money borrowed and indebtedness
evidenced by securities, notes, debentures, bonds or other similar
instruments issued by us, including the senior debt securities or
letters of credit;
o all capitalized lease obligations;
o all hedging obligations;
o all obligations representing the deferred purchase price of property;
and
o all deferrals, renewals, extensions and refundings of obligations of
the type referred to above;
o but senior debt does not include:
o subordinated debt securities; and
o any indebtedness that by its terms is subordinated to, or ranks on an
equal basis with, our subordinated debt securities.
Covenants
Any series of offered debt securities may have covenants in addition to or
differing from those included in the applicable indenture which will be
described in subsequent filings prepared in connection with the offering of such
securities, limiting or restricting, among other things:
o the ability of us or our subsidiaries to incur either secured or
unsecured debt, or both;
o the ability to make certain payments, dividends, redemptions or
repurchases;
o our ability to create dividend and other payment restrictions
affecting our subsidiaries;
o our ability to make investments;
o mergers and consolidations by us or our subsidiaries;
o sales of assets by us;
o our ability to enter into transactions with affiliates;
o our ability to incur liens; and
o sale and leaseback transactions.
Modification of the Indentures
Each indenture and the rights of the respective holders may be modified by
us only with the consent of holders of not less than a majority in aggregate
principal amount of the outstanding debt securities of all series under the
respective indenture affected by the modification, taken together as a class.
But no modification that:
(1) changes the amount of securities whose holders must consent to an
amendment, supplement or waiver;
(2) reduces the rate of or changes the interest payment time on any security or
alters its redemption provisions (other than any alteration to any such
section which would not materially adversely affect the legal rights of any
holder under the indenture) or the price at which we are required to offer
to purchase the securities;
(3) reduces the principal or changes the maturity of any security or reduce the
amount of, or postpone the date fixed for, the payment of any sinking fund
or analogous obligation;
(4) waives a default or event of default in the payment of the principal of or
interest, if any, on any security (except a rescission of acceleration of
the securities of any series by the holders of at least a majority in
principal amount of the outstanding securities of that series and a waiver
of the payment default that resulted from such acceleration);
(5) makes the principal of or interest, if any, on any security payable in any
currency other than that stated in the Security;
(6) makes any change with respect to holders' rights to receive principal and
interest, the terms pursuant to which defaults can be waived, certain
modifications affecting shareholders or certain currency-related issues; or
(7) waives a redemption payment with respect to any Security or change any of
the provisions with respect to the redemption of any securities will be
effective against any holder without his consent.
Other terms as specified in subsequent filings may be modified without the
consent of the holders.
Events of Default
Each indenture defines an event of default for the debt securities of any
series as being any one of the following events:
o default in any payment of interest when due which continues for 30
days;
o default in any payment of principal or premium when due;
o default in the deposit of any sinking fund payment when due;
o default in the performance of any covenant in the debt securities or
the applicable indenture which continues for 60 days after we receive
notice of the default;
o default under a bond, debenture, note or other evidence of
indebtedness for borrowed money by us or our subsidiaries (to the
extent we are directly responsible or liable therefor) having a
principal amount in excess of a minimum amount set forth in the
applicable subsequent filing, whether such indebtedness now exists or
is hereafter created, which default shall have resulted in such
indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable, without
such acceleration having been rescinded or annulled or cured within 30
days after we receive notice of the default; and
o events of bankruptcy, insolvency or reorganization.
An event of default of one series of debt securities does not necessarily
constitute an event of default with respect to any other series of debt
securities.
There may be such other or different events of default as described in an
applicable subsequent filing with respect to any class or series of offered debt
securities.
In case an event of default occurs and continues for the debt securities of
any series, the applicable trustee or the holders of not less than 25% in
aggregate principal amount of the debt securities then outstanding of that
series may declare the principal and accrued but unpaid interest of the debt
securities of that series to be due and payable. Any event of default for the
debt securities of any series which has been cured may be waived by the holders
of a majority in aggregate principal amount of the debt securities of that
series then outstanding.
Each indenture requires us to file annually after debt securities are
issued under that indenture with the applicable trustee a written statement
signed by two of our officers as to the absence of material defaults under the
terms of that indenture. Each indenture provides that the applicable trustee may
withhold notice to the holders of any default if it considers it in the interest
of the holders to do so, except notice of a default in payment of principal,
premium or interest.
Subject to the duties of the trustee in case an event of default occurs and
continues, each indenture provides that the trustee is under no obligation to
exercise any of its rights or powers under that indenture at the request, order
or direction of holders unless the holders have offered to the trustee
reasonable indemnity. Subject to these provisions for indemnification and the
rights of the trustee, each indenture provides that the holders of a majority in
principal amount of the debt securities of any series then outstanding have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the trustee or exercising any trust or power conferred on
the trustee as long as the exercise of that right does not conflict with any law
or the indenture.
Defeasance and Discharge
The terms of each indenture provide us with the option to be discharged
from any and all obligations in respect of the debt securities issued thereunder
upon the deposit with the trustee, in trust, of money or U.S. government
obligations, or both, which through the payment of interest and principal in
accordance with their terms will provide money in an amount sufficient to pay
any installment of principal, premium and interest on, and any mandatory sinking
fund payments in respect of, the debt securities on the stated maturity of the
payments in accordance with the terms of the debt securities and the indenture
governing the debt securities. This right may only be exercised if, among other
things, we have received from, or there has been published by, the United States
Internal Revenue Service a ruling to the effect that such a discharge will not
be deemed, or result in, a taxable event with respect to holders. This discharge
would not apply to our obligations to register the transfer or exchange of debt
securities, to replace stolen, lost or mutilated debt securities, to maintain
paying agencies and hold moneys for payment in trust.
Defeasance of Certain Covenants
The terms of the debt securities provide us with the right to omit
complying with specified covenants and that specified events of default
described in a subsequent filing will not apply. In order to exercise this
right, we will be required to deposit with the trustee money or U.S. government
obligations, or both, which through the payment of interest and principal will
provide money in an amount sufficient to pay principal, premium, if any, and
interest on, and any mandatory sinking fund payments in respect of, the debt
securities on the stated maturity of such payments in accordance with the terms
of the debt securities and the indenture governing such debt securities. We will
also be required to deliver to the trustee an opinion of counsel to the effect
that we have received from, or there has been published by, the IRS a ruling to
the effect that the deposit and related covenant defeasance will not cause the
holders of such series to recognize income, gain or loss for federal income tax
purposes.
A subsequent filing may further describe the provisions, if any, of any
particular series of offered debt securities permitting a discharge defeasance.
Subsidiary Guarantees
Certain of our subsidiaries may guarantee the debt securities we offer. In
that case, the terms and conditions of the subsidiary guarantees will be set
forth in the applicable prospectus supplement. Unless we indicate differently in
the applicable prospectus supplement, if any of our subsidiaries guarantee any
of our debt securities that are subordinated to any of our senior indebtedness,
then the subsidiary guarantees will be subordinated to the senior indebtedness
of such subsidiary to the same extent as our debt securities are subordinated to
our senior indebtedness.
Global Securities
The debt securities of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with, or on behalf
of, a depository identified in an applicable subsequent filing and registered in
the name of the depository or a nominee for the depository. In such a case, one
or more global securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate principal amount of
outstanding debt securities of the series to be represented by the global
security or securities. Unless and until it is exchanged in whole or in part for
debt securities in definitive certificated form, a global security may not be
transferred except as a whole by the depository for the global security to a
nominee of the depository or by a nominee of the depository to the depository or
another nominee of the depository or by the depository or any nominee to a
successor depository for that series or a nominee of the successor depository
and except in the circumstances described in an applicable subsequent filing.
We expect that the following provisions will apply to depository
arrangements for any portion of a series of debt securities to be represented by
a global security. Any additional or different terms of the depository
arrangement will be described in an applicable subsequent filing.
Upon the issuance of any global security, and the deposit of that global
security with or on behalf of the depository for the global security, the
depository will credit, on its book-entry registration and transfer system, the
principal amounts of the debt securities represented by that global security to
the accounts of institutions that have accounts with the depository or its
nominee. The accounts to be credited will be designated by the underwriters or
agents engaging in the distribution of the debt securities or by us, if the debt
securities are offered and sold directly by us. Ownership of beneficial
interests in a global security will be limited to participating institutions or
persons that may hold interest through such participating institutions.
Ownership of beneficial interests by participating institutions in the global
security will be shown on, and the transfer of the beneficial interests will be
effected only through, records maintained by the depository for the global
security or by its nominee. Ownership of beneficial interests in the global
security by persons that hold through participating institutions will be shown
on, and the transfer of the beneficial interests within the participating
institutions will be effected only through, records maintained by those
participating institutions. The laws of some jurisdictions may require that
purchasers of securities take physical delivery of the securities in
certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in the global securities.
So long as the depository for a global security, or its nominee, is the
registered owner of that global security, the depository or its nominee, as the
case may be, will be considered the sole owner or holder of the debt securities
represented by the global security for all purposes under the applicable
indenture. Unless otherwise specified in an applicable subsequent filing and
except as specified below, owners of beneficial interests in the global security
will not be entitled to have debt securities of the series represented by the
global security registered in their names, will not receive or be entitled to
receive physical delivery of debt securities of the series in certificated form
and will not be considered the holders thereof for any purposes under the
indenture. Accordingly, each person owning a beneficial interest in the global
security must rely on the procedures of the depository and, if such person is
not a participating institution, on the procedures of the participating
institution through which the person owns its interest, to exercise any rights
of a holder under the indenture.
The depository may grant proxies and otherwise authorize participating
institutions to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action which a holder is entitled to give or
take under the applicable indenture. We understand that, under existing industry
practices, if we request any action of holders or any owner of a beneficial
interest in the global security desires to give any notice or take any action a
holder is entitled to give or take under the applicable indenture, the
depository would authorize the participating institutions to give the notice or
take the action, and participating institutions would authorize beneficial
owners owning through such participating institutions to give the notice or take
the action or would otherwise act upon the instructions of beneficial owners
owning through them.
Unless otherwise specified in an applicable subsequent filings, payments of
principal, premium and interest on debt securities represented by global
security registered in the name of a depository or its nominee will be made by
us to the depository or its nominee, as the case may be, as the registered owner
of the global security.
We expect that the depository for any debt securities represented by a
global security, upon receipt of any payment of principal, premium or interest,
will credit participating institutions' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the global security as shown on the records of the depository. We also expect
that payments by participating institutions to owners of beneficial interests in
the global security held through those participating institutions will be
governed by standing instructions and customary practices, as is now the case
with the securities held for the accounts of customers registered in street
names, and will be the responsibility of those participating institutions. None
of us, the trustees or any agent of ours or the trustees will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in a global security, or for
maintaining, supervising or reviewing any records relating to those beneficial
interests.
Unless otherwise specified in the applicable subsequent filings, a global
security of any series will be exchangeable for certificated debt securities of
the same series only if:
o the depository for such global securities notifies us that it is
unwilling or unable to continue as depository or such depository
ceases to be a clearing agency registered under the Exchange Act and,
in either case, a successor depository is not appointed by us within
90 days after we receive the notice or become aware of the
ineligibility;
o we in our sole discretion determine that the global securities shall
be exchangeable for certificated debt securities; or
o there shall have occurred and be continuing an event of default under
the applicable indenture with respect to the debt securities of that
series.
Upon any exchange, owners of beneficial interests in the global security or
securities will be entitled to physical delivery of individual debt securities
in certificated form of like tenor and terms equal in principal amount to their
beneficial interests, and to have the debt securities in certificated form
registered in the names of the beneficial owners, which names are expected to be
provided by the depository's relevant participating institutions to the
applicable trustee.
In the event that the Depository Trust Company, or DTC, acts as depository
for the global securities of any series, the global securities will be issued as
fully registered securities registered in the name of Cede & Co., DTC's
partnership nominee.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participating institutions deposit with DTC. DTC also
facilitates the settlement among participating institutions of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in participating institutions'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct participating institutions include securities brokers and
dealers, banks, trust companies, clearing corporations and other organizations.
DTC is owned by a number of its direct participating institutions and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others, such as securities brokers and dealers and banks and trust
companies that clear through or maintain a custodial relationship with a direct
participating institution, either directly or indirectly. The rules applicable
to DTC and its participating institutions are on file with the Commission.
To facilitate subsequent transfers, the debt securities may be registered
in the name of DTC's nominee, Cede & Co. The deposit of the debt securities with
DTC and their registration in the name of Cede & Co. will effect no change in
beneficial ownership. DTC has no knowledge of the actual beneficial owners of
the debt securities. DTC's records reflect only the identity of the direct
participating institutions to whose accounts debt securities are credited, which
may or may not be the beneficial owners. The participating institutions remain
responsible for keeping account of their holdings on behalf of their customers.
Delivery of notices and other communications by DTC to direct participating
institutions, by direct participating institutions to indirect participating
institutions, and by direct participating institutions and indirect
participating institutions to beneficial owners of debt securities are governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect.
Neither DTC nor Cede & Co. consents or votes with respect to the debt
securities. Under its usual procedures, DTC mails a proxy to the issuer as soon
as possible after the record date. The proxy assigns Cede & Co.'s consenting or
voting rights to those direct participating institution to whose accounts the
debt securities are credited on the record date.
If applicable, redemption notices shall be sent to Cede & Co. If less than
all of the debt securities of a series represented by global securities are
being redeemed, DTC's practice is to determine by lot the amount of the interest
of each direct participating institutions in that issue to be redeemed.
To the extent that any debt securities provide for repayment or repurchase
at the option of the holders thereof, a beneficial owner shall give notice of
any option to elect to have its interest in the global security repaid by us,
through its participating institution, to the applicable trustee, and shall
effect delivery of the interest in a global security by causing the direct
participating institution to transfer the direct participating institution's
interest in the global security or securities representing the interest, on
DTC's records, to the applicable trustee. The requirement for physical delivery
of debt securities in connection with a demand for repayment or repurchase will
be deemed satisfied when the ownership rights in the global security or
securities representing the debt securities are transferred by direct
participating institutions on DTC's records.
DTC may discontinue providing its services as securities depository for the
debt securities at any time. Under such circumstances, in the event that a
successor securities depository is not appointed, debt security certificates are
required to be printed and delivered as described above.
We may decide to discontinue use of the system of book-entry transfers
through the securities depository. In that event, debt security certificates
will be printed and delivered as described above.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but we take no
responsibility for its accuracy.
DESCRIPTION OF PURCHASE CONTRACTS
We may issue purchase contracts for the purchase or sale of:
o debt or equity securities issued by us or securities of third parties,
a basket of such securities, an index or indices of such securities or
any combination of the above as specified in the applicable prospectus
supplement;
o currencies; or
o commodities.
Each purchase contract will entitle the holder thereof to purchase or sell,
and obligate us to sell or purchase, on specified dates, such securities,
currencies or commodities at a specified purchase price, which may be based on a
formula, all as set forth in the applicable prospectus supplement. We may,
however, satisfy our obligations, if any, with respect to any purchase contract
by delivering the cash value of such purchase contract or the cash value of the
property otherwise deliverable or, in the case of purchase contracts on
underlying currencies, by delivering the underlying currencies, as set forth in
the applicable prospectus supplement. The applicable prospectus supplement will
also specify the methods by which the holders may purchase or sell such
securities, currencies or commodities and any acceleration, cancellation or
termination provisions or other provisions relating to the settlement of a
purchase contract.
The purchase contracts may require us to make periodic payments to the
holders thereof or vice versa, which payments may be deferred to the extent set
forth in the applicable prospectus supplement, and those payments may be
unsecured or pre-funded on some basis. The purchase contracts may require the
holders thereof to secure their obligations in a specified manner to be
described in the applicable prospectus supplement. Alternatively, purchase
contracts may require holders to satisfy their obligations thereunder when the
purchase contracts are issued. Our obligation to settle such pre-paid purchase
contracts on the relevant settlement date may constitute indebtedness.
Accordingly, pre-paid purchase contracts will be issued under either the senior
indenture or the subordinated indenture.
DESCRIPTION OF UNITS
As specified in the applicable prospectus supplement, we may issue units
consisting of one or more purchase contracts, warrants, debt securities,
preferred shares, common shares or any combination of such securities. The
applicable prospectus supplement will describe:
o the terms of the units and of the purchase contracts, warrants, debt
securities, preferred shares and common shares comprising the units,
including whether and under what circumstances the securities
comprising the units may be traded separately;
o a description of the terms of any unit agreement governing the units;
and
o a description of the provisions for the payment, settlement, transfer
or exchange or the units.
EXPENSES
The following are the estimated expenses of the issuance and distribution
of the securities being registered under the Registration Statement of which
this prospectus forms a part, all of which will be paid by us.
SEC registration fee $ 16,050
Blue sky fees and expenses $________*
Printing and engraving expenses $________*
Legal fees and expenses $________*
Rating agency fees $________*
Accounting fees and expenses $________*
Indenture trustee fees and experts $________*
Transfer agent and registrar $________*
Miscellaneous $________*
---------------
Total $________*
===============
* To be provided by a prospectus supplement or as an exhibit to Report on Form
6-K that is incorporated by reference into this prospectus.
LEGAL MATTERS
The validity of the securities offered by this prospectus will be passed
upon for us by Seward & Kissel LLP, New York, New York with respect to matters
of U.S. and Marshall Islands law.
EXPERTS
The consolidated financial statements of DryShips Inc. appearing in
DryShips Inc.'s Annual Report on Form 20-F for the year ended December 31, 2005,
have been audited by Ernst & Young (Hellas) Certified Auditors Accountants S.A.,
independent registered public accounting firm, as stated in their report
thereon, included therein, and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
As required by the Securities Act of 1933, we filed a registration
statement relating to the securities offered by this prospectus with the
Commission. This prospectus is a part of that registration statement, which
includes additional information.
Government Filings
We file annual and special reports within the Commission. You may read and
copy any document that we file at the public reference facilities maintained by
the Commission at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may
obtain information on the operation of the public reference room by calling 1
(800) SEC-0330, and you may obtain copies at prescribed rates from the Public
Reference Section of the Commission at its principal office in Washington, D.C.
20549. The Commission maintains a website (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. In addition, you can
obtain information about us at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
Information Incorporated by Reference
The SEC allows us to "incorporate by reference" information that we file
with it. This means that we can disclose important information to you by
referring you to those filed documents. The information incorporated by
reference is considered to be a part of this prospectus, and information that we
file later with the SEC prior to the termination of this offering will also be
considered to be part of this prospectus and will automatically update and
supersede previously filed information, including information contained in this
document.
We incorporate by reference the documents listed below and any future
filings made with the Commission under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
o Annual Report on Form 20-F for the year ended December 31, 2005, filed
with the Commission on April 21, 2006, which contains audited
consolidated financial statements for the most recent fiscal year for
which those statements have been filed.;
o The description of our securities contained in our Registration
Statement on Form F-1, (File No. 333-122008) as amended, filed with
the Comission on January 13, 2005 and any amendment or report filed
for the purpose of updating that description; and
o Registration Statement on Form 8-A filed with the Commission on
January 31, 2005.
We are also incorporating by reference all subsequent annual reports on
Form 20-F that we file with the Commission and certain Reports on Form 6-K that
we furnish to the Commission after the date of this prospectus (if they state
that they are incorporated by reference into this prospectus) until we file a
post-effective amendment indicating that the offering of the securities made by
this prospectus has been terminated. In all cases, you should rely on the later
information over different information included in this prospectus or the
prospectus supplement.
You should rely only on the information contained or incorporated by
reference in this prospectus and any accompanying prospectus supplement. We have
not, and any underwriters have not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus and any accompanying prospectus
supplement as well as the information we previously filed with the Commission
and incorporated by reference, is accurate as of the dates on the front cover of
those documents only. Our business, financial condition and results of
operations and prospects may have changed since those dates.
You may request a free copy of the above mentioned filing or any subsequent
filing we incorporated by reference to this prospectus by writing or telephoning
us at the following address:
DryShips Inc.
Attn: Christopher J. Thomas
80 Kifissias Avenue
Amaroussion GR 151 25
(011) (30) 210 80 90 570
Information Provided by the Company
We will furnish holders of our common stock with annual reports containing
audited financial statements and a report by our independent registered public
accounting firm. The audited financial statements will be prepared in accordance
with U.S. generally accepted accounting principles. As a "foreign private
issuer," we are exempt from the rules under the Securities Exchange Act
prescribing the furnishing and content of proxy statements to shareholders.
While we furnish proxy statements to shareholders in accordance with the rules
of the Nasdaq National Market, those proxy statements do not conform to Schedule
14A of the proxy rules promulgated under the Securities Exchange Act. In
addition, as a "foreign private issuer," we are exempt from the rules under the
Securities Exchange Act relating to short swing profit reporting and liability.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
--------------------------------------------------------------------------------
Item 8. Indemnification of Directors and Officers.
(1) The By-Laws of the Registrant provide that any person who is or was a
director or officer of the Registrant, or is or was serving at the
request of the Registrant as a director or officer of another
partnership, joint venture, trust or other enterprise shall be
entitled to be indemnified by the Registrant upon the same terms,
under the same conditions, and to the same extent as authorized by
Section 60 of the Business Corporation Act of the Republic of The
Marshall Islands, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
the Registrant, and, with respect to any criminal action or
proceeding, had reasonable cause to believe his conduct was unlawful.
Section 60 of the Associations Law of the Republic of the Marshall Islands
provides as follows:
Indemnification of directors and officers.
(1) Actions not by or in right of the corporation. A corporation shall
have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea
of no contest, or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the bests
interests of the corporation, and, with respect to any criminal action
or proceedings, had reasonable cause to believe that his conduct was
unlawful.
(2) Actions by or in right of the corporation. A corporation shall have
the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a
director or officer of the corporation, or is or was serving at the
request of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him or
in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except
that no indemnification shall be made in respect of any claims, issue
or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to
the corporation unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem
proper.
(3) When director or officer successful. To the extent that a director or
officer of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (1) or (2) of this section, or in the defense of a claim,
issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(4) Payment of expenses in advance. Expenses incurred in defending a civil
or criminal action, suit or proceeding may be paid in advance of the
final disposition of such action, suit or proceeding as authorized by
the board of directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to
be indemnified by the corporation as authorized in this section.
(5) Indemnification pursuant to other rights. The indemnification and
advancement of expenses provided by, or granted pursuant to, the other
subsections of this section shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity
while holding such office.
(6) Continuation of indemnification. The indemnification and advancement
of expenses provided by, or granted pursuant to, this section shall,
unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(7) Insurance. A corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director or officer
of the corporation or is or was serving at the request of the
corporation as a director or officer against any liability asserted
against him and incurred by him in such capacity whether or not the
corporation would have the power to indemnify him against such
liability under the provisions of this section.
Item 9. Exhibits
Exhibit Number Description
--------------------------------------------------------------------------------
1.1 Form of Sales Agreement
1.2 Underwriting Agreement (for equity securities)*
1.3 Underwriting Agreement (for debt securities)*
4.1 Form of Common Stock Certificate**
4.2 Preferred Share Certificate*
4.3 Form of Debt Securities Indenture
5.1 Form of Opinion of Seward & Kissel LLP, United States and
Marshall Islands counsel to the Company as to the validity
of the common stock, preferred stock, debt securities,
warrants, purchase contracts and units
8.1 Form of Opinion of Seward & Kissel LLP, with respect to
certain tax matters
23.1 Consent of Seward & Kissel LLP (included in Exhibit 5.1)
23.2 Consent of Independent Registered Public Accounting Firm
24 Power of Attorney (contained in signature page)
25.1 T-1 Statement of Eligibility (senior indenture)*
25.2 T-1 Statement of Eligibility (subordinated indenture)*
* To be filed either as an amendment or as an exhibit to a report filed
pursuant to the Securities Exchange Act of 1934 of the Registrant and
incorporated by reference into this Registration Statement.
** Incorporated herein by reference to Exhibit 4 to the Registration Statement
of DryShips Inc. on Form F-1, Registration No. 333-122008 filed with the
SEC on January 13, 2005.
Item 10. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement, unless the
information required to be included is to contained in reports filed
with or furnished to the Commission that are incorporated by reference
in this Registration Statement or is contained in a form of prospectus
filed pursuant to Rule 424(b) under the Securities Act that is part of
this Registration Statement,
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) To file a post-effective amendment to the registration statement to
include any financial statements required by Item 8.A. of Form 20-F at
the start of any delayed offering or throughout a continuous offering.
Financial statements and information otherwise required by Section
10(a)(3) of the Act need not be furnished, provided, that the
registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph
(a)(4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of
those financial statements. Notwithstanding the foregoing, with
respect to registration statements on Form F-3, a post-effective
amendment need not be filed to include financial statements and
information required by Section 10(a)(3) of the Securities Act of 1933
or Rule 3-19 under the Securities Act of 1933 if such financial
statements and information are contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Form F-3.
(5) Each prospectus filed by the registrant pursuant to Rule 424(b)(3)
shall be deemed to be part of this Registration Statement as of the
date the filed prospectus was deemed part of and included in this
Registration Statement.
(6) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of this Registration Statement for the
purpose of providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included in
this Registration Statement as of the earlier of the date such form of
prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the
issuer and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration statement to
which that prospectus relates, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or
made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of contract
of sale prior to such effective date, supersede or modify any
statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such
document immediately prior to such effective date.
(7) The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this Registration
Statement, regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the
undersigned registrant will be a seller to the purchaser and will be
considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant
to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by
or on behalf of the undersigned registrant or used or referred to
by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
(8) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(9) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus
is sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to
and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X is
not set forth in the prospectus, to deliver, or cause to be delivered
to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(10) The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules an regulations prescribed by the Commission
under Section 305(b)(2) of the Trust Indenture Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Athens, Country of Greece, on April 21, 2006.
DRYSHIPS INC.
/s/ GEORGE ECONOMOU
------------------------
By: George Economou
Title: Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of George Economou, Christopher J.
Thomas, Gary J. Wolfe and Robert E. Lustrin his true and lawful attorney-in-fact
and agent, with full powers of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully for
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or his
substitute, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on April
21, 2006 in the capacities indicated.
Signature Title Date
--------- ----- ----
/s/ GEORGE ECONOMOU Director, Chairman, April 21, 2006
-------------------------- President and Chief
George Economou Executive Officer
(Principal Executive Officer)
/s/ CHRISTOPHER J. THOMAS Director and Chief April 21, 2006
-------------------------- Financial Officer
Christopher J. Thomas (Principal Financial Officer)
/s/ NIKOLAS P. TSAKOS Director April 21, 2006
--------------------------
Nikolas P. Tsakos
/s/ ANGELOS PAPOULIAS Director April 21, 2006
--------------------------
Angelos Papoulias
/s/ PROKOPIOS TSIRIGAKIS Director April 21, 2006
--------------------------
Prokopios Tsirigakis
/s/ EUGENIA VOULIKA Corporate Secretary April 21, 2006
--------------------------
Eugenia Voulika
AUTHORIZED UNITED STATES REPRESENTATIVE
Pursuant to the requirement of the Securities Act of 1933, the undersigned, the
duly authorized representative in the United States of the aforementioned
Registrant, has signed this Registration Statement in the City of Newark,
State of Delaware, on April 21, 2006.
PUGLISI & ASSOCIATES
/s/ DONALD J. PUGLISI
-------------------------------
Donald J. Puglisi
Managing Director
EXHIBIT INDEX
Exhibit Number Description
--------------------------------------------------------------------------------
1.1 Form of Sales Agreement
1.2 Underwriting Agreement (for equity securities)*
1.3 Underwriting Agreement (for debt securities)*
4.1 Form of Common Stock Certificate**
4.2 Preferred Share Certificate*
4.3 Form of Debt Securities Indenture
5.1 Form of Opinion of Seward & Kissel LLP, United States and
Marshall Islands counsel to the Company as to the validity
of the common stock, preferred stock, debt securities,
warrants, purchase contracts and units
8.1 Form of Opinion of Seward & Kissel LLP, with respect to
certain tax matters
23.1 Consent of Seward & Kissel LLP (included in Exhibit 5.1)
23.2 Consent of Independent Registered Public Accounting Firm
24 Power of Attorney (contained in signature page)
25.1 T-1 Statement of Eligibility (senior indenture)*
25.2 T-1 Statement of Eligibility (subordinated indenture)*
* To be filed either as an amendment or as an exhibit to a report filed
pursuant to the Securities Exchange Act of 1934 of the Registrant and
incorporated by reference into this Registration Statement.
** Incorporated herein by reference to Exhibit 4 to the Registration Statement
of DryShips Inc. on Form F-1, Registration No. 333-122008 filed with the
SEC on January 13, 2005.