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Feb 3, 2009

DryShips gets agreement to restructure two loans

George Economou's DryShips Inc. (NasdaqGS:DRYS) has reached an in principle agreement with one its lenders to restructure two loan facilities.

In an SEC filing last week, DryShips said that two banks that collectively held $751.8 million of its indebtedness had notified the company that it was in breach of certain financial covenants in its loan agreements, and that it had been in communication with another lender holding $650 million of its outstanding indebtedness regarding breach of loan covenants. "Currently," the filing said, "we are in discussions with these and other lenders for waivers and amendments of certain financial and other covenants contained in our loan agreements.

Today, DryShips said it had reached an in principle agreement with Piraeus Bank, one of its largest lenders, to restructure its two loan facilities in the original aggregate principal amount of $220.0 million with current outstanding $164.9 million.

As part of the restructuring, which DryShips says is "caused in large part by the failure of certain buyers to conclude the agreed purchase of three vessels," the basic terms will provide for: (1) a waiver regarding financial and asset coverage covenants through January 1, 2011; (2) an increased applicable margin; (3) an amendment fee; (4) rescheduling the loan principal amortization by reducing the principal repayments by about 47% and 21% in 2009 and 2010, respectively, and reducing the tenor of the loan. [The "tenor" of a loan is the amount of time left for the repayment of a loan or contract or the initial term length of a loan].

DryShips says the the agreement with Piraeus Bank is preliminary and is subject to execution of definitive documents, providing, inter alia, for substantial reduction of the loan should the three vessels be disposed, and formal approval by Piraeus Bank's Credit Committee.

DryShips owns a fleet of 43 drybulk carriers comprising seven Capesize, 29 Panamax, two Supramax and five newbuilding drybulk vessels with a combined deadweight tonnage of approximately 3.9 million tons plus ultra deep water semi-submersible drilling rigs and two ultra deep water newbuilding drillships.


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