Danaos Sinks to Loss due to Hanjin Impairments

Image courtesy of Danaos

Athens-based containership owner Danaos Corporation swung to a net loss of USD 366.2 million in 2016 from a profit of USD 117 million in 2015, largely impacted by the bankruptcy of South Korea’s Hanjin Shipping.

The company saw a decrease in operating revenues as well, which went down to USD 498.3 million in 2016 from USD 567.9 million in 2015.

During the fourth quarter of 2016, Danaos posted a net loss of USD 446.6 million, compared to a profit of USD 6.5 million seen in the same quarter of 2015. Revenues for the quarter amounted to USD 112.1 million against USD 143.3 million recorded in Q4 2015.

“Danaos’ results for the fourth quarter of 2016 reflect the impact of the bankruptcy of Hanjin Shipping, which previously chartered eight of our vessels on long term charter party agreements representing approximately 20% of our fixed contracted revenue. These charter party agreements were terminated, and each of the chartered vessels was returned to us,” John Coustas, Danaos’ CEO, commented.

After Hanjin canceled the charters, Danaos’ fleet utilization decreased to 90.4% in Q4 2016.

“We have re-chartered five 3,400 TEU vessels on short term charters at market rates that reflect the prevailing weak chartering environment and managed to secure employment of up to 12 months starting from April 2017 for the remaining three 10,100 TEU vessels. Excluding the effect of these cancellations, our fleet utilization increased to 99.5% compared to 98.3% in the fourth quarter of 2015,” the firm’s CEO added.

Coustas further said that, as a result of the decrease in Danaos’ operating income and charter attached values, the firm was in breach of certain financial covenants as of December 31, 2016, for which it has obtained waivers until April 1, 2017. As the waivers are for a period less than 12 months after the balance sheet date, all of the debt has been classified as current on the December financial statements.

Danaos revealed it has submitted to the Bankruptcy Court of Seoul an unsecured claim for unpaid charter hire, charges, expenses and loss of profit against Hanjin totaling USD 597.9 million.

As of December 2016, Danaos recorded an impairment loss of USD 415.1 million related to 25 of its vessels, compared to an impairment loss of USD 41.1 million in relation to 13 of the company’s ships.

Danaos’ fleet is currently comprised of 59 containerships with an aggregate tonnage of 353,586 TEUs, including four vessels owned by Gemini Shipholdings Corporation, a joint venture between the company and its largest shareholder.

Source: World Maritime News (LF)

Source: World Maritime News