Danaos moves to delay deliveries

Piraeus-based Danaos Corp is close to pushing back one third of its vessel deliveries in one of container shipping’s biggest newbuilding programmes.
Five vessels have already been delayed by up to eight months, while the New York Stock Exchange-listed company is close to finalising agreements to delay another five by between two and seven months. Senior executives at the Greek container vessel-owning company said the moves were instigated at the behest of beleaguered charterers rather than purely as a matter of its own strategy. “It is the charter that comes back to us and we have to accommodate them within the shipbuilders’ schedule,” said chief financial officer Dimitri Andritsoyiannis in a conference call with analysts. “We will continue to do so,” he added, signalling likely further discussions over additional ships in the 30-vessel forward construction programme. But the company said it was not being pressed to cancel particular newbuildings or drop charter rates. “So far we have not had any indication of pressure for this,” said chief executive John Coustas. The disclosures came as Danaos reported stable earnings for last year and announced it was axing dividend payments to bolster its balance sheet. The company posted a net profit of $23.8m for the fourth quarter, which after excluding a non-recurring insurance expense mirrored its $25.5m profit for the same three months of 2007. Danaos posted net income of $117.1m for the full year, equating on a comparable adjusted basis to a 10.7% increase on the previous year. Results were helped by the sale of five container vessels during 2008, contributing a gain of $16.9m. The delivery delays so far agreed had been negotiated in co-operation with charterers, said Danaos, and involved remaining construction payments of $422m. It claimed it was “in the final stages” of pushing back the additional five. Assuming the negotiations are successfully finalised, Danaos would expect seven deliveries this year, rather than nine as previously scheduled, nine in 2010 instead of 13, and 14 in 2011, whereas initially for that year only eight were due. The later deliveries are in general the larger vessels, ranging from 8,500 teu to 12,500 teu. All 30 remaining newbuildings are on long-term charters to what Danaos called “some of the largest and most reliable counterparties in the shipping industry”. The company recently had to find new employment for a 2,100 teu vessel because of the collapse of Senator Lines, but it said it had no further anticipated re-chartering until the second quarter of 2010. “Although the current economic situation is presenting everybody in our trade with new challenges, our chartering arrangements do not allow for unilateral modification of the prevailing terms,” Danaos underlined. Due to the recent plunge in vessel values, the company has determined it is in breach of certain financial covenants, but it said it had either obtained waivers or was in discussions to receive waivers from lenders. Danaos president and chief executive John Coustas said last year’s performance was “highly satisfactory”. As a majority owner of Danaos, with a stake of about 80%, he emphasised that the board’s decision to suspend dividends and retain cash had his strong support.


Published : March 16, 2009