CASES
Dryships, Inc.
Class Period: Dec 1, 2008 to Dec 31, 2010
Lead Plaintiff Deadline: Jan 24, 2012 + Deadline passed
Summary of Case:
A securities class action has been filed against Dryships, Inc. ("Dryships" or the "Company") on behalf of all who purchased or otherwise acquired Dryships securities between December 1, 2008 to December 31, 2010. This case has been filed in the USDC - Eastern District of Missouri.
The Complaint alleges that Economou and the Dryships Board entered into an October 6, 2008, agreement to purchase nine vessels from Economou's private fleet, with reckless disregard for the interests of DryShips and its shareholders, and with a primary goal of allowing Defendants, Economou and Kandylidi, to secure 3.5 million shares of DryShips at prices between S20 and S30 per share.and Khanna promotes two-for-one deal.
On October 8, 2008, in a press release, DryShips announced that in addition to purchasing nine Capesize drybulk carriers, it was also entering the offshore drilling segment. Economou boasted that DryShips was entering an industry that has "solid prospects for the next three to five years."
This venture was marked by procurement of two UDW vessels. Primclcad Shareholders Inc ("Primclcad"), a 100% wholly owned subsidiary of DryShips, has entered into an agreement to take over equity interests of a holding company which owns two advanced capability UDW drillships, which are controlled by clients of Cardiff, including Economou. In consideration for the drillships, the sellers, including Economou, received 25% of all the then issued and outstanding shares of Primclcad. Primelead was later renamed Ocean Rig UDW.
In the press release, Economou stated that DryShips intends to spin off Primclead to its shareholders in the form of a share dividend. Further, he misleadingly promised that DryShips intended to file the necessary documents with the SEC within "the next few weeks and to complete the spin off either during the 4`" quarter of 2008 or the Ist quarter of 2009 subject to SEC review." However in order to complete the spin-off process, DryShips needed to secure charters and financing to cover the $1.0 billion in shipyard payments. Due to lack of financing and charters, it was not feasible for DryShips to complete the spin-off. Moreover, all throughout the 4th quarter of 2008, and 2009 and 2010, Economou and then Khanna continued to feed DryShips shareholders with empty promises of spin-off. Khanna has indicated during October 27, 2009, Third Quarter Earnings Conference Call, DryShips was in fact considering the IPO option.
Khanna has continued to promote DryShips stock as a great buy, a two-for-one deal, because by purchasing DryShips stock, investors were also "buying a free option on [his] drillships." Based on Khanna's false representations regarding the IPO, DryShips shareholders paid an inflated market price for Dryships common stock.
The complaint alleges that it was entirely foreseeable to DryShips, Economou, Khanna and the DryShips Board that concealing from investors (i) DryShips deteriorating financial condition, (ii) DryShips intent to raise equity, (iii) the circumstances surrounding the spin-off and/or IPO, including DryShips' ability to secure charters and financing, would artificially inflate the price of DryShips common stock. It was similarly foreseeable that the ultimate disclosure of this information and, in particular, the truth about DryShips' ability to comply with its loan covenants and drillships IPO, would cause the price of DryShips' securities to drop significantly as the inflation caused by their earlier misstatements was removed from stock.
If you purchased this company's shares during the Class Period and suffered a loss or for further information about the case, please review the links below.