Danaos Corporation Announces Agreement for the Acquisition of Six 5,466 TEU Eco-design Wide Beam Container Vessels

Rhea-AI Summary

Danaos Corporation (NYSE: DAC) has announced the acquisition of six 5,466 TEU container vessels for $260 million, set to enhance its contracted revenue by approximately $71 million and EBITDA by $39 million. The vessels, averaging 6.8 years old, come with a charter duration of about 2 years. This deal, funded by cash on hand, positions Danaos to leverage its strong balance sheet for growth, with the acquisition expected to be immediately accretive. The eco-designed vessels will be delivered by Q3 2021, promising improved efficiency compared to traditional models.

Positive

• Acquisition increases contracted revenue by approximately $71 million.
• Expected EBITDA contribution of $39 million enhances financial outlook.
• Acquisition funded by cash preserves financial flexibility.
• Vessels have staggered contracts creating re-chartering opportunities.
• Eco-design improves fuel efficiency and operational efficiency.

Negative

• None.

Danaos Corporation (the "Company") (NYSE: DAC) today announced that it has entered into an agreement to acquire six 5,466 TEU container vessels built at Hanjin Subic Bay shipyard en bloc for $260 million (the “Acquisition”). The vessels, which have an average age of 6.8 years, are on time charter contracts to leading liner companies with a weighted average charter duration of approximately 2 years.

The Acquisition will increase the Company's contracted revenue by approximately $71 million and the Company's contracted EBITDA by approximately $39 million in total and will be funded by cash at hand, although the Company is evaluating debt financing alternatives to finance part of the purchase price.

The Company’s CEO, Dr. John Coustas commented:

“We are very pleased to announce an immediately accretive acquisition of a modern fleet at a fraction of the newbuilding cost and considerably lower than its charter free market value. The purchase price and contracted revenue associated with the vessels significantly reduce the residual risk of this transaction. Also, the targeted vessel segment has very favorable supply dynamics, and the vessels’ staggered charters with durations between one and three years provide re-chartering upside. Danaos is uniquely positioned to capitalize on the strength of our balance sheet to pursue this type of growth opportunity, and we are firmly committed to continuing to take actions to create value for our shareholders.”

The acquired vessels, which are expected to be gradually delivered to the Company by the end of the third quarter of 2021, are eco-design wide beam vessels with improved fuel consumption and load efficiency characteristics when compared to conventional designs.

About Danaos Corporation

Danaos Corporation is one of the largest independent owners of modern, large-size containerships. Our fleet of 65 containerships aggregating 403,793 TEUs ranks Danaos among the largest containership charter owners in the world based on total TEU capacity. Our fleet is chartered to many of the world’s largest liner companies on fixed-rate charters. Danaos Corporation’s shares trade on the New York Stock Exchange under the symbol “DAC”.

Forward-Looking Statements

Matters discussed in this release may constitute forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements reflect the current views of Danaos Corporation (including subsidiaries unless indicated or the context requires otherwise, the “Company,” “we,” “us,” and “our”) with respect to future events and financial performance and may include statements concerning our operations, cash flows, financial position, including with respect to vessel and other asset values, plans, objectives, goals, strategies, future events, performance or business prospects, changes and trends in our business and the markets in which we operate, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this release are based upon various assumptions. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the impact of the novel coronavirus 2019 (“COVID-19”) pandemic and efforts throughout the world to contain its spread, including effects on global economic activity, demand for seaborne transportation of containerized cargo, the ability and willingness of charterers to fulfill their obligations to us, charter rates for containerships, shipyards performing scrubber installations, drydocking and repairs, changing vessel crews and availability of financing, the effects of its debt refinancing transactions, the Company’s ability to achieve the expected benefits of its refinancing transactions and comply with the terms of its credit facilities and other agreements entered into in connection with the such refinancing, the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, charter counterparty performance, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, ability to obtain financing and comply with covenants in our financing arrangements, actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.

Risks and uncertainties are further described in reports filed by Danaos Corporation with the U.S. Securities and Exchange Commission.

The forward-looking statements and information contained in this announcement are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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FAQ

What details are involved in the DAC acquisition of vessels?

Danaos Corporation is acquiring six 5,466 TEU container vessels for $260 million.

How will the DAC acquisition impact contracted revenue?

The acquisition will increase Danaos Corporation's contracted revenue by approximately $71 million.

What is the projected EBITDA from the DAC vessel acquisition?

The acquisition is expected to contribute approximately $39 million in contracted EBITDA.

When are the vessels from the DAC acquisition expected to be delivered?

The vessels are expected to be delivered gradually by the end of Q3 2021.

How does the acquisition impact Danaos Corporation's financial strategy?

The acquisition is funded by cash on hand, indicating strong financial health and flexibility.