Despite lawsuits, DryShips announces 5th reverse stock split this year

The latest reverse stock split by DryShips Inc., which is currently under investigation for securities fraud, takes effect on July 21, the same day the company’s common shares will begin trading on a split-adjusted basis on the Nasdaq Capital Market.

   Athens, Greece-based dry bulk shipping company DryShips Inc.’s board of directors has determined to effect a 1-for-7 reverse stock split of the company’s issued common shares, according to a statement from the firm, shares of which have been on a roller-coaster ride for the last few months.
   The news comes as the company is being investigated for securities fraud and is facing multiple class-action lawsuits.
   The reverse stock split will take effect as of the opening of trading on July 21. The company’s common shares will begin trading on a split adjusted basis on the Nasdaq Capital Market on the same date under the existing trading symbol DRYS, according to DryShips.
   When the reverse stock split becomes effective, every seven shares of the company’s issued common stock will be automatically combined into one share of common stock.
   As of July 18, the company had 36,296,095 common shares issued and outstanding, so effecting the reverse stock split would reduce the number of issued and outstanding common shares to about 5.2 million shares.
   No fractional shares will be issued relating to the reverse split of the issued common shares, DryShips said. Shareholders who would otherwise hold a fractional share of the company’s common shares are to receive a cash payment in lieu thereof at a price equal to that fraction to which the shareholder would otherwise be entitled multiplied by the closing price of the company’s common shares on the Nasdaq Capital Market on July 20.
   Shareholders with shares held in book-entry form or through a bank, broker, or other nominee will see the impact of the reverse stock split reflected in their accounts on or after July 21, DryShips said.
   The company’s latest reverse stock split action is the fifth of its kind this year. DryShips initiated a 1-5 reverse stock split in June, which followed a 1-7 reverse split the month before, a 1-4 reverse split in April, and a 1-8 reverse split in January.
   The behavior has led to no less than 10 class-action investor lawsuits against the company calling on stockholders who acquired shares in the company in the past 13 months to join the litigation.
   Among the allegations against DryShips are that it is using systemic stock manipulation to artificially inflate its share price and that it violated national securities laws by not disclosing material non-public information to shareholders.
   Shares in the company have plunged about 100 percent since January. On July 19, the stock closed at $0.50 per share, according to Nasdaq.