UPDATE 2-DryShips gets going concern notice from auditors

* Says gets going concern notice from auditors

* Notice due to reclassification of $1.8 bln debt as current

* Analysts expect co to get waiver on loan

* Shares down 19 pct

(Adds analyst comments, updates share movement)

By Arup Roychoudhury

BANGALORE, March 30 (Reuters) - Greek dry bulk carrier DryShips Inc (DRYS.O) said it got a going concern notice from its auditors as the company reclassified $1.8 billion of long-term debt as current.

Shares of DryShips fell as much as 19 percent Monday morning on Nasdaq.

The company said its inability to comply with certain financial and other covenants under its loan agreements raised substantial doubt about its ability to continue as a going concern.

"The auditors' main concern is the high level of current debt, which DryShips would not be able to repay based on its cash balance of $300 million and approximate cash flow of $300 million per year," Oppenheimer and Co analyst Scott Burk told Reuters.

Last week, DryShips said it was in discussions with some of its lenders concerning current breaches of loan covenants, and pending the outcome of such discussions it had reclassified about $1.8 billion in debt as short-term.

Analysts believe the company will be able to obtain waivers on its short-term debt, as other dry bulk carriers such as Star Bulk Carriers Corp (SBLK.O), Genco Shipping and Trading Ltd (GNK.N) and Eagle Bulk Shipping Inc (EGLE.O) have recently obtained covenant waivers in view of falling freight rates and weak asset values.

"All these companies have been able to secure waivers," Jefferies and Co analyst Doug Mavrinac said. "We would expect the same from DryShips. If they don't, then the debt they have reclassified as short-term debt becomes a major, major problem."

Burk said he expects the company to obtain the waivers since it has enough charters to cover interest and modest principal repayments.

DryShips said it will generate sufficient cash from operations and proceeds from new equity to satisfy its liquidity needs for the next 12 months.

In a statement, Chief Executive George Economou said the company had already taken steps to cut capital spending by $2 billion in capital expenditures and had secured revenues of more than $2.4 billion in the next three years from drybulk time charters and offshore drilling contracts.

"We have repositioned DryShips for the long term and remain ahead of the curve," Economou said.

In the latest fourth quarter, the company posted a $1.02 billion loss, hurt mainly by a goodwill impairment charge, and forecast a loss from the disposal of three capesize newbuildings.

Shares of the company were trading down 17 percent at $4.86 on Nasdaq.

For the alerts, please double click [ID:nWNAB8464] (Additional reporting by Supantha Mukherjee in Bangalore; Editing by Jarshad Kakkrakandy)