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Containership Owner and Operator Danaos Books Multi-Year Charters, Vessel Sales Worth $1 Billion

Mike Schuler
Total Views: 3172
January 18, 2022

Athens-based containership owner and operator Danaos Corporation (NYSE: DAC) has announced entering into new multi-year charter agreements for 11 of its vessel which will add about $870 million in incremental contracted revenue to its backlog.

The company also announced the sale of two 20-year-old containerships for a total of $130 million. Combined, the two transactions will add about $1 billion in incremental revenues and sales proceeds for the company.

The 11 vessels, ranging in size from 2,500 to 10,000 TEU, will be chartered by undisclosed major liner companies and will commence on the expiration of the vessels’ existing charters between February 2022 and April 2023. The charters will have a revenue weighted average contract duration of 4.7 years, extending up to May 2028.

Danaos said the new charters increase its contracted revenue backlog by approximately $870 million, or by approximately $700 million in contracted EBITDA. Inclusive of the charters, total contracted operating revenue was $2.8 billion, as of December 31, 2021, with a remaining average contracted charter duration of four years, weighted by aggregate contracted charter revenue. Additionally, contract coverage in terms of operating days is now 95% for 2022, 77% for 2023 and 57% for 2024, the company said.

In terms of the vessel sales, Danaos will sell 20-year-old 6,422 TEU vessels for a total consideration of $130 million and are expected to be delivered to their buyer in November 2022. Danaos acquired the two vessels as part of the consolidation of Gemini Shipholdings Corporation back in July 2021, based on a fair value of $73 million, and the company expects to book a “healthy profit” when the sale is completed.

“We are very pleased to announce the continued improvement of our contracted backlog with multi-year charters for 11 of our vessels and the profitable sale of two older vessels,” said Danaos CEO, Dr. John Coustas “The combined result is up to $1 billion of contracted revenue accretion and sales proceeds. These transactions significantly improve our liquidity and cash flow visibility for the next several years and further strengthen our balance sheet. We will continue to work to maximize our profitability and secure more accretive transactions with a focus on creating value for our shareholders.”

Danaos’ current fleet is comprised of 71 containerships aggregating 436,589 TEUs.

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