Danaos in Discussions with Hanjin on Charter Rate Cuts

first_imgzoom Athens-based containership owner Danaos Corporation has started the negotiations on charter rate cuts with South Korean shipping company Hanjin Shipping as the shipping giant publicly announced its intention to restructure its balance sheet and seek concessions from charter owners.As the discussions are ongoing, Danaos said that it “cannot speculate on the timing or the nature of the resolution.”The talks were initiated after the Greek owner reached a charter rate reduction deal with the shipping firm Hyundai Merchant Marine on July 15.Namely, the company entered the agreement with HMM to reduce its charter rates by 20% for the next 3.5 years.The deal would be made in exchange for USD 39 million in debt notes maturing up to 2024 and 4.6 million common shares in HMM that are expected to be freely tradable on the Stock Market Division of the Korean Exchange.Danaos said that after the agreed 3.5 year period the original contracted rates will be restored, adding that the deal preserves the value of its charters.During the second quarter of 2016, Danaos saw it net income rise to USD 44.6 million, compared to a net income of USD 38 million reported in the same period a year ago, while its net income for the first half of the year stood at USD 88.7 million, against USD 68.4 million in the first half of 2015.The company’s operating revenues for the quarter were slightly lower at USD 136.9 million, against the USD 141.4 million recorded in the second quarter of 2015. A similar decrease was noted in the half yearly operating revenues, which stood at USD 274.4 million, compared to USD 280 million seen in the first half a year earlier.“The containership market continues to be extremely challenging but is now moving sideways, an indication that we have likely reached the bottom,” Danaos’ CEO John Coustas said.Coustas added that Danaos anticipates the market environment to remain unchanged for the remainder of the year, “over which we will also start to experience the effect of the expanded Panama Canal which will shift demand from panamax to post-panamax vessels. We are cautiously optimistic that market fundamentals will gradually begin to improve by the spring of 2017.”last_img

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