DryShips to price $300 million five-year convertibles to yield 4.5%-5%, up 25%-30%

By Rebecca Melvin

New York, Nov. 17 - DryShips Inc. launched a $300 million offering of five-year convertible senior notes late Tuesday, which were talked to yield 4.5% to 5% with an initial conversion premium of 25% to 30%, according to market sources.

Final terms on the deal were expected Thursday after the market close.

There is an option to purchase up to $45 million of additional notes to cover over-allotments.

Proceeds will be used for vessel acquisitions, working capital and other general corporate purposes.

Deutsche Bank Securities Inc. is the bookrunner.

The bonds will be non-callable for life, with no puts. There is dividend and takeover protection.

DryShips also intends to enter into a share lending agreement with Deutsche Bank AG, London Branch, under which it will loan to Deutsche Bank AG shares of its common stock having a market value of about $150 million.

In addition, DryShips will enter into an equity underwriting agreement with Deutsche Bank Securities Inc. under which Deutsche Bank AG will sell shares that they will be entitled to borrow from the company under the share lending agreement.

These shares will be offered in an underwritten off-the-shelf registered offering to facilitate hedging transactions undertaken by the purchasers of the convertible notes.

DryShips is an Athens, Greece-based marine transportation services company.

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