Banks Waiver for DryShips

DryShips clinches first waiver deal with banks (Lloyd's List) Nigel Lowry, Athens - Tuesday 3 February 2009

GEORGE Economou-led DryShips has reached a deal in principle to restructure two loans with Piraeus Bank, one of its leading lenders. The agreement on the facilities, which totalled $220m in principal but have already been paid down to $164.9m, includes a two year waiver on financial and asset covenants. It also includes reduction of principal repayments by 47% this year and 21% for 2010. In return the bank has increased margins, as well as levying an amendment fee and reducing the tenor of the loan. The deal, although preliminary and subject to formal approval by the bank’s credit committee, is the first concrete sign of progress in the dry bulk and offshore drillship company’s negotiations with banks after last week admitting it was in talks about breached covenants. That disclosure, contained in a new $500m shelf registration, mentioned it was in talks with a number of its banks regarding loan covenants, including two lenders over breaches in connection with a combined $752m of debt, and with a third lender holding some $650m of debt. It was not clear whether Piraeus Bank was one of the three banks specifically referred to last week. According to one well placed source, it was not but could still be counted among the larger lenders. “The bank will have taken an overall view of the health of the company, not just its bit,” said one Greek banker of the restructuring and waiver. The deal appeared to mean “the bank does not have too much concern about performance,” said the financial source. In its statement, the Nasdaq listed shipping company said the restructuring had been caused “in large part” by the failure of three bulker sales agreed last year. The panamaxes La Jolla, Paragon and Toro had been sold for a total $190m but have had to be retained by DryShips. The agreement with Piraeus Bank also provides for substantial reduction of the loan if the three vessels are disposed of.