In 2005, George Economou led about a dozen Greek dry-bulk shipping firms to publicly list their companies in the U.S., starting with the IPO of his own DryShips. But Economou’s DryShips voyage is now sinking and may be nearing its end.
On Tuesday, shares of DryShips fell by 44% to $1.31 after DryShips said the prolonged market downturn in the drybulk segment and continuing depressed outlook on freight rates and vessels’ market values “raise substantial doubt about the company’s ability to continue as a going concern.” The reason: The company doesn’t have the cash and assets available to repay its defaulted loans. Three of Dryships’ bank facilities have matured and the company has not made the final payments on them. The company has also suspended interest and principal payments on its other defaulted bank loans.
George Economou. Credit: Yannis Kontos/ Polaris for Forbes
Economou listed the company on Nasdaq for $18 a share and the stock changed hands for as much as $2,785 per share in 2007. Forbes figured at the time that Economou’s stake in DryShips made him worth $1.7 billion. Today, Economou’s 17.6% stake in DryShips is worth about $6 million. But that doesn’t mean that Economou is poor. The transactions between DryShips and Economou’s affiliates detailed in Securities & Exchange Commission filings have been going on for years and show Economou left with plenty of assets.
Economou still controls privately-held Cardiff Marine, a ship management business that has at times managed both Dryships’ vessels and Economou’s private fleet. In the last year, entities connected to Economou have purchased 17 dry bulk vessels and 10 tankers from Dryships. A number of years ago, Economou guided Dryships into buying an equity stake in drilling company Ocean Rig and Economou eventually became CEO of the company and owns a 5.4% stake in it. Dryships recently sold its shares in Ocean Rig and used the cash to repay a loan from Economou.
Don’t expect Economou to be too concerned for Dryships’ shareholders. “Who are my investors?” Economou once asked in a Forbes interview. “Computer models, hedge funds and some institutions that go in and make $10 and get out.”
