UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR

15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of May 2024

 

Commission File Number 001-33060

 

DANAOS CORPORATION

(Translation of registrant’s name into English)

 

Danaos Corporation

c/o Danaos Shipping Co. Ltd.

14 Akti Kondyli

185 45 Piraeus

Greece

Attention: Secretary

011 030 210 419 6480

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F   x      Form 40-F  ¨

 

 

 

 

 

EXHIBIT INDEX

 

99.1Operating and Financial Review and Prospects and Condensed Consolidated Financial Statements (Unaudited) for the Three Months Ended March 31, 2024.

 

99.2Facility Agreement for a $450 million Loan Facility

 

*****

 

This report on Form 6-K is hereby incorporated by reference into the Company’s (i)  Registration Statement on Form F-3 (Reg. No. 333-237284) filed with the SEC on March 19, 2020, (ii) the post effective Amendment to Form F-1 in the Registration Statement on Form F-3 (Reg. No. 333-226096) filed with the SEC on March 6, 2019, (iii) Registration Statement on Form F-3 (Reg. No. 333-174494) filed with the SEC on May 25, 2011, (iv) Registration Statement on Form F-3 (Reg. No. 333-147099), the related prospectus supplements filed with the SEC on December 17, 2007, January 16, 2009 and March 27, 2009, (v) Registration Statement on Form S-8 (Reg. No. 333-233128) filed with the SEC on August 8, 2019 and the reoffer prospectus, dated August 8, 2019, contained therein, (vi) Registration Statement on Form S-8 (Reg. No. 333-138449) filed with the SEC on November 6, 2006 and the reoffer prospectus, dated November 6, 2006, contained therein, (vii) Registration Statement on Form F-3 (Reg. No. 333-169101) filed with the SEC on October 8, 2010, (viii) Registration Statement on Form F-3 (Reg. No. 333-255984) filed with the SEC on May 10, 2021 and (ix) Registration Statement on Form F-3 (Reg. No. 333-270457) filed with the SEC on March 10, 2023.

 

2

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: May 28, 2024

 

  DANAOS CORPORATION
     
  By: /s/ Evangelos Chatzis
  Name: Evangelos Chatzis
  Title: Chief Financial Officer

 

3

 

 

EXHIBIT 99.1

 

DANAOS CORPORATION

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

 

The following discussion and analysis should be read in conjunction with our interim condensed consolidated financial statements (unaudited) and the notes thereto included elsewhere in this report.

 

Results of Operations

 

Three months ended March 31, 2024 compared to three months ended March 31, 2023

 

During the three months ended March 31, 2024, Danaos had an average of 68.0 container vessels and 7.0 Capesize drybulk vessels compared to 68.3 container vessels and no drybulk vessels during the three months ended March 31, 2023. Our container vessels utilization for the three months ended March 31, 2024 was 97.3% compared to 96.8% for the three months ended March 31, 2023. The increase in container vessels utilization was mainly due to the decreased days of scheduled dry-docking of our container vessels.

 

Operating Revenues

 

Operating revenues increased by 4.0%, or $9.8 million, to $253.4 million in the three months ended March 31, 2024 from $243.6 million in the three months ended March 31, 2023.

 

Operating revenues of our container vessels segment decreased by 4.2%, or $10.2 million, to $233.4 million in the three months ended March 31, 2024 from $243.6 million in the three months ended March 31, 2023, analyzed as follows:

 

·a $3.0 million increase in revenues in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 mainly as a result of higher charter rates and improved vessels utilization;

 

·a $2.7 million decrease in revenues in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to vessel disposals;

 

·a $3.0 million decrease in revenues in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to decreased amortization of assumed time charters; and

 

·a $7.5 million decrease in revenue in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to lower non-cash revenue recognition in accordance with US GAAP.

 

Operating revenues of our drybulk vessels segment added an incremental $20.0 million of revenues in the three months ended March 31, 2024 compared to no such operating revenues in the three months ended March 31, 2023.

 

Voyage Expenses

 

Voyage expenses increased by $12.4 million to $20.3 million in the three months ended March 31, 2024 from $7.9 million in the three months ended March 31, 2023 primarily as a result of the $12.0 million in voyage expenses related to our recently acquired 7 Capesize drybulk vessels, which generated revenue mainly from voyage charter agreements compared to no such expenses in the three months ended March 31, 2023.

 

Voyage expenses of container vessels segment increased by $0.4 million to $8.3 million in the three months ended March 31, 2024 from $7.9 million in the three months ended March 31, 2023 mainly due to increased commissions. Total voyage expenses of container vessels comprised $7.8 million commissions and $0.5 million other voyage expenses in the three months ended March 31, 2024.

 

Voyage expenses of drybulk vessels segment were $12.0 million in the three months ended March 31, 2024 compared to no voyage expenses in the three months ended March 31, 2023. Total voyage expenses of drybulk vessels comprised $1.2 million commissions and $10.8 million other voyage expenses, mainly bunkers consumption and port expenses, in the three months ended March 31, 2024.

 

1

 

 

Vessel Operating Expenses

 

Vessel operating expenses increased by $2.5 million to $43.1 million in the three months ended March 31, 2024 from $40.6 million in the three months ended March 31, 2023, primarily as a result of the increase in the average number of vessels in our fleet due to recent dry bulk vessels acquisitions, which was partially offset by the decrease in the average daily operating cost of our vessels to $6,493 per vessel per day for the three months ended March 31, 2024 compared to $6,807 per vessel per day for the three months ended March 31, 2023. Management believes that our daily operating costs remain among the most competitive in the industry.

 

Depreciation

 

Depreciation expense increased by 7.6%, or $2.4 million, to $33.9 million in the three months ended March 31, 2024 from $31.5 million in the three months ended March 31, 2023 mainly due to depreciation expense related to 7 recently acquired Capesize drybulk vessels.

 

Amortization of Deferred Drydocking and Special Survey Costs

 

Amortization of deferred dry-docking and special survey costs increased by $1.7 million to $5.5 million in the three months ended March 31, 2024 from $3.8 million in the three months ended March 31, 2023.

 

General and Administrative Expenses

 

General and administrative expenses increased by $3.4 million, to $10.2 million in the three months ended March 31, 2024 from $6.8 million in the three months ended March 31, 2023. The increase was mainly attributable to increased stock-based compensation and management fees.

 

Gain on Sale of Vessels

 

In January 2023, we completed the sale of the container vessel Amalia C for net proceeds of $4.9 million resulting in a gain of $1.6 million compared to no gain on sale of vessels in the three months ended March 31, 2024.

 

Interest Expense and Interest Income

 

Interest expense decreased by 53.7%, or $3.6 million, to $3.1 million in the three months ended March 31, 2024 from $6.7 million in the three months ended March 31, 2023. The decrease in interest expense is a result of:

 

·a $1.0 million decrease in interest expense due to a decrease in our average indebtedness by $94.0 million between the two periods. Average indebtedness was $413.7 million in the three months ended March 31, 2024, compared to average indebtedness of $507.7 million in the three months ended March 31, 2023. This decrease was partially offset by an increase in our debt service cost by approximately 0.6% as a result of higher interest rates;

 

·a $2.4 million decrease in interest expense due to an increase in capitalized interest expense on our vessels under construction in the three months ended March 31, 2024; and

 

·a $0.2 million decrease in the amortization of deferred finance costs and debt discount.

 

As of March 31, 2024, our outstanding debt, gross of deferred finance costs, was $458.6 million, which included $262.8 million principal amount of our Senior Notes. These balances compare to debt of $431.1 million, which included $262.8 million principal amount of our Senior Notes and our leaseback obligation of $66.3 million, gross of deferred finance costs, as of March 31, 2023.

 

Interest income increased by $0.2 million to $2.9 million in the three months ended March 31, 2024 compared to $2.7 million in the three months ended March 31, 2023.

 

Gain on Investments

 

The change in fair value of our shareholding interest in Eagle Bulk Shipping Inc. (“EGLE”) of $11.0 million was recognized in the three months ended March 31, 2024 as gain on investments compared to none in the three months ended March 31, 2023.

 

Dividend Income

 

Dividend income of $0.9 million was recognized on EGLE common shares in the three months ended March 31, 2024 compared to none in the three months ended March 31, 2023.

 

2

 

 

Equity Loss on Investments

 

Equity loss on investments amounting to $0.1 million and $2.6 million in the three months March 31, 2024 and March 31, 2023, respectively, relates to our share of initial expenses of a recently established company, Carbon Termination Technologies Corporation (“CTTC”), currently engaged in the research and development of decarbonization technologies for the shipping industry.

 

Other Finance Expenses

 

Other finance expenses decreased by $0.1 million to $0.9 million in the three months ended March 31, 2024 compared to $1.0 million in the three months ended March 31, 2023.

 

Loss on Derivatives

 

Amortization of deferred realized losses on interest rate swaps remained stable at $0.9 million in each of the three months ended March 31, 2024 and March 31, 2023.

 

Other Income/(expenses), net

 

Other income, net remained stable at $0.2 million in each of the three months ended March 31, 2024 and March 31, 2023.

 

Liquidity and Capital Resources

 

Our principal source of funds has been operating cash flows, vessel sales, and long-term bank borrowings, as well as equity provided by our stockholders from our initial public offering in October 2006; common stock sales in August 2010 and the fourth quarter of 2019, the capital contribution of Danaos Investment Limited as Trustee of the 883 Trust (“DIL”) on August 10, 2018 and dividends and sales proceeds from our divested investment in ZIM ordinary shares in 2022. In February 2021, we sold $300 million of 8.500% senior unsecured notes due 2028 (the “Senior Notes”). In December 2022, we repurchased $37.2 million aggregate principal amount of our Senior Notes in a privately negotiated transaction. We may also at any time and from time to time, seek to retire or purchase our outstanding debt securities through cash purchases, in open-market purchases, privately negotiated transactions or otherwise. Our principal uses of funds have been capital expenditures to establish, grow and maintain our fleet, including our expansion into the drybulk shipping sector, comply with international shipping standards, environmental laws and regulations and to fund working capital requirements and repayment of debt.

 

Our short-term liquidity needs primarily relate to the funding of our vessel operating expenses, drydocking costs, installment payments for our contracted containership newbuildings, payments for the acquisition of drybulk vessels, debt interest payments, servicing our debt obligations, payment of dividends and repurchases of our common stock. Our long-term liquidity needs primarily relate to installment payments for our contracted newbuildings and any additional vessel acquisitions in the containership or drybulk sector and debt repayment. We anticipate that our primary sources of funds will be cash from operations and equity or debt financings. We currently expect that the sources of funds available to us will be sufficient to meet our short-term liquidity and long-term liquidity requirements.

 

Under our existing multi-year charters as of March 31, 2024, we had $2.1 billion of total contracted cash revenues, with $645.8 million for the remainder of 2024, $671.3 million for 2025 and $0.8 billion thereafter. Although these contracted cash revenues are based on contracted charter rates, we are dependent on the ability and willingness of our charterers to meet their obligations under these charters. In May 2022, we received a $238.9 million charter hire prepayment related to charter contracts for 15 of our vessels, representing partial prepayment of charter hire payable during the period from May 2022 through January 2027. This prepayment is recorded as unearned revenue on our balance sheet and recognized as revenue in our income statement over the term of the applicable charters.

 

As of March 31, 2024, we had cash and cash equivalents of $324.3 million. As of March 31, 2024, there was $326.25 million of remaining borrowing availability under our Citibank $382.5 mil. Revolving Credit Facility and $395.0 million under our Syndicated $450.0 million Facility. As of March 31, 2024, we had $458.6 million of outstanding indebtedness (gross of deferred finance costs), including $262.8 million relating to our Senior Notes. As of March 31, 2024, we were obligated to make quarterly fixed amortization payments, totaling $20.5 million to March 31, 2025, related to the long-term bank debt. We are also obligated to make certain payments to our Manager, Danaos Shipping, under our management agreement which has a term through December 31, 2025, as described below under “—Management Agreement”.

 

3

 

 

In March 2024, we entered into a syndicated loan facility agreement of up to $450 million (“Syndicated $450.0 million Facility”), which is secured by eight of our container vessels under construction. An amount of $55.0 million was drawn down as of March 31, 2024 and subsequent to March 31, 2024 we drew down an additional $63.0 million related to a delivery of a newbuilding vessel. This facility is repayable in quarterly instalments up to September 2030. The facility bears interest at SOFR plus a margin of 1.85%. In June 2022, we drew down $130.0 million under a new senior secured term loan facility from BNP Paribas and Credit Agricole, which is secured by six 5,466 TEU sister vessels acquired in 2021. This facility is repayable in 8 quarterly instalments of $5.0 million, followed by 12 quarterly instalments of $1.9 million together with a balloon payment of $67.2 million payable over five-year term. In December 2022, we early extinguished the remaining $437.75 million of the Citibank/Natwest $815 mil. Facility and replaced it with the $382.5 mil. Revolving Credit Facility with Citibank, out of which nil is drawn down as of March 31, 2024 and with the Alpha Bank $55.25 mil. Facility, which was drawn down in full and under which $45.9 million is outstanding as of March 31, 2024. The Citibank $382.5 mil. Revolving Credit Facility is reducing and repayable over 5 years in 20 quarterly reductions of $11.25 million each together with a final reduction of $157.5 million at maturity in December 2027. We pay a commitment fee at a rate of 0.8% per annum on the undrawn amount of this facility. The Alpha Bank $55.25 mil. Facility is repayable over 5 years with 20 consecutive quarterly instalments of $1.875 million each, together with a balloon payment of $17.75 million at maturity in December 2027.

 

In April 2022, we entered into contracts for the construction of four 8,000 TEU container vessels, out of which one was delivered to us from the shipyard in May 2024, one is expected to be delivered in the second quarter of 2024 and two are expected to be delivered in the third quarter of 2024. In March 2022, we entered into contracts for the construction of two 7,100 TEU container vessels, out of which one was delivered to us from the shipyard in April 2024 and one is expected to be delivered in the third quarter of 2024. In April 2023, we entered into contracts for the construction of two 6,000 TEU container vessels with expected vessels delivery in 2025. In June 2023, we entered into contracts for the construction of two 8,200 TEU container vessels with expected vessels delivery in 2026. In February and March 2024, we entered into contracts for the construction of four 8,200 TEU container vessels for an aggregate purchase price of $376.8 million. These container vessels are expected to be delivered to us in 2026 through 2027. The aggregate purchase price of the vessel construction contracts amounts to $1,211.7 million, out of which $95.5 million, $88.9 million and $184.9 million was paid in the three months ended March 31, 2024 and in the years ended December 31, 2023 and 2022, respectively.

 

The remaining contractual commitments under these 14 vessel construction contracts are analyzed as follows as of March 31, 2024 (in millions of U.S. dollars):

 

Payments due by period ended    
December 31, 2024   $326.6 
December 31, 2025    134.3 
December 31, 2026    230.8 
December 31, 2027   150.7 
Total contractual commitments   $842.4 

  

In February 2024, we entered into agreements to acquire three Capesize bulk carriers built in 2010 through 2011 that aggregate 529,704 DWT for a total purchase price of $79.9 million, out of which $14.6 million was advanced before March 31, 2024 and the remaining amount of $65.3 million is payable between June and July 2024, when these vessels are expected to be delivered to us.

 

Additionally, a supervision fee of $850 thousand per newbuilding vessel is payable to Danaos Shipping Company Limited (the “Manager”) over the construction period starting from steel cutting. Supervision fees totaling $0.4 million and $3.0 million were charged by the Manager and capitalized to the vessels under construction in the three months ended March 31, 2024 and in the year ended December 31, 2023, respectively. Interest expense amounting to $5.8 million, $17.4 million and $5.0 million was capitalized to the vessels under construction in the three months ended March 31, 2024 and in the years ended December 31, 2023 and 2022, respectively.

 

In March 2024, we sold for scrap the vessel Stride, which had been off-hire since January 8, 2024 due to damage from a fire in the engine room that was subsequently contained. The proceedings with the insurers are currently in progress.

 

4

 

 

On May 27, 2024, we declared a dividend of $0.80 per share of common stock payable on June 20, 2024 to holders of record on June 11, 2024. We intend to pay a regular quarterly dividend on our common stock, which will have an impact on our liquidity. Payments of dividends are subject to the discretion of our board of directors, provisions of Marshall Islands law affecting the payment of distributions to stockholders and the terms of our credit facilities, which permit the payment of dividends so long as there has been no event of default thereunder nor would occur as a result of such dividend payment, finance leases and Senior Notes, which include limitations on the amount of dividends and other restricted payments that we may make, and will be subject to conditions in the container and drybulk shipping industries, our financial performance and us having sufficient available excess cash and distributable reserves.

 

In June 2022, we announced a share repurchase program of up to $100 million of our common stock. A $100 million increase to the existing share repurchase program, for a total aggregate amount of $200 million, was approved by our Board of Directors on November 10, 2023. We repurchased 57,901 shares of our common stock in the open market for $4.1 million in the three months ended March 31, 2024; 1,131,040 shares for $70.6 million in the year ended December 31, 2023 and 466,955 shares for $28.6 million the period ended December 31, 2022. As of May 27, 2024, we repurchased a total of 1,671,059 shares of common stock for $104.4 million under our share purchase program. All purchases have been made on the open market within the safe harbor provisions of Regulation 10b-18 under the Exchange Act. Under the share repurchase program, shares of our common stock may be purchased in open market or privately negotiated transactions, at times and prices that are considered to be appropriate by the Company, and the program may be suspended or discontinued at any time.

 

Eagle Bulk Shipping Inc./Star Bulk Carriers Corp. Securities

 

In June 2023, we acquired marketable securities of Eagle Bulk Shipping Inc., which was an owner of bulk carriers listed on the New York Stock Exchange (Ticker: EGLE) consisting of 1,552,865 shares of common stock for $68.2 million (out of which $24.4 million from Virage International Ltd., our related company). As of March 31, 2024 and December 31, 2023, these marketable securities were fair valued at $97.0 million and $86.0 million, respectively and we recognized a $11.0 million gain and $17.9 million gain on these marketable securities reflected under “Gain on investments” in the condensed consolidated statement of income in the three months ended March 31, 2024 and the period ended December 31, 2023, respectively. Additionally, we recognized dividend income on these shares amounting to $0.9 million in the three months ended March 31, 2024 and $1.0 million in the period ended December 31, 2023. On December 11, 2023, Star Bulk Carriers Corp. (Ticker: SBLK) and EGLE announced that both companies had entered into a definitive agreement to combine in an all-stock merger, which was completed on April 9, 2024. Under the terms of the agreement, EGLE shareholders received 2.6211 shares of SBLK common stock in exchange for each share of EGLE common stock owned. As a result, as of May 27, 2024, we own 4,070,214 shares of common stock of Star Bulk Carriers Corp., a Nasdaq-listed owner and operator of drybulk vessels.

 

Carbon Termination Technologies Corporation

 

In March 2023, we invested $4.3 million in the common shares of a newly established company Carbon Termination Technologies Corporation (“CTTC”), incorporated in the Republic of the Marshall Islands, which represents our 49% ownership interest. CTTC currently engages in research and development of decarbonization technologies for the shipping industry. Equity method of accounting is used for this investment. Our share of CTTC’s initial expenses amounted to $0.1 million and $4.0 million and is presented under “Equity income/(loss) on investments” in the consolidated statements of income in the three months ended March 31, 2024 and in the period ended December 31, 2023, respectively.

 

Impact of the Wars in Ukraine and Gaza on the Company’s Business

 

The current conflict between Russia and Ukraine, and related sanctions imposed by the U.S., EU and others, adversely affect the crewing operations of our Manager, which has crewing offices in St. Petersburg, Odessa and Mariupol (damaged by the war), and trade patterns involving ports in the Black Sea or Russia, and as well as impacting world energy supply and creating uncertainties in the global economy, which in turn impact containership and drybulk demand. The extent of the impact will depend largely on future developments.

 

The war between Israel and Hamas in the Gaza Strip and potential disruption of shipping routes such as Houthi attacks in the Red Sea and the Gulf of Aden, has not affected the Company’s business to date; however, an escalation of these conflicts could have reverberations on the regional and global economies that could have the potential to adversely affect demand for cargoes and the Company’s business.

 

5

 

 

Impact of Inflation and Interest Rates Risk on our Business

 

We continue to see near-term impacts on our business due to elevated inflation in the United States of America, Eurozone and other countries, including ongoing global prices pressures in the wake of the war in Ukraine, driving up energy prices and commodity prices, which continue to affect our operating expenses. Interest rates have increased rapidly and substantially as central banks in developed countries raised interest rates in an effort to subdue inflation. The eventual long-term implications of tight monetary policy, and higher long-term interest rates may continue to drive a higher cost of capital for our business.

 

Segments

 

Until the acquisition of the drybulk vessels in 2023, we reported financial information and evaluated our operations by total charter revenues. Since 2023, for management purposes, we are organized based on operating revenues generated from container vessels and drybulk vessels and have two reporting segments: (1) a container vessels segment and (2) a drybulk vessels segment. The container vessels segment owns and operates container vessels which are primarily chartered on multi-year, fixed-rate time charter and bareboat charter agreements. The drybulk vessels segment owns and operates drybulk vessels to provide drybulk commodities transportation services.

 

Our chief operating decision maker monitors and assesses the performance of the container vessels segment and the drybulk vessels segment based on net income. Items included in the applicable segment’s net income are directly allocated to the extent that the items are directly or indirectly attributable to the segments. With regards to the items that are allocated by indirect calculations, their allocation is commensurate to the utilization of key resources. The Other segment includes components that are not allocated to any of our reportable segments and includes investments in an affiliate accounted for using the equity method accounting and investments in marketable securities.

 

The following table summarizes our selected financial information for the three months ended March 31, 2024, by segment (in thousands):

 

   Container
vessels segment
   Drybulk
vessels segment
   Other   Total 
Operating revenues  $233,411   $20,038    -   $253,449 
Voyage expenses   (8,280)   (12,062)   -    (20,342)
Vessel operating expenses   (38,162)   (4,952)   -    (43,114)
Depreciation   (32,008)   (1,855)   -    (33,863)
Amortization of deferred drydocking and special survey costs   (5,452)   -    -    (5,452)
Interest income   2,936    -    -    2,936 
Interest expenses   (3,124)   -    -    (3,124)
Equity loss on investment   -    -    (109)   (109)
Net Income  $138,359   $337   $11,802   $150,498 

 

   Container
vessels segment
   Drybulk
vessels segment
   Other   Total 
Total assets  $3,531,062   $181,520   $97,168   $3,809,750 

 

In the three months ended March 31, 2023, there was no drybulk vessel segment. Net income from container vessels segment was $148,789 thousand, which excludes equity loss on investments of $(2,588) thousand.

 

Cash Flows

 

   Three Months   Three Months 
   ended   ended 
   March 31, 2024   March 31, 2023 
   (In thousands) 
Net cash provided by operating activities  $153,292   $127,594 
Net cash used in investing activities  $(123,411)  $(6,085)
Net cash provided by/(used in) financing activities  $22,636   $(29,597)

 

6

 

 

Net Cash Provided by Operating Activities

 

Net cash flows provided by operating activities increased by $25.7 million, to $153.3 million provided by operating activities in the three months ended March 31, 2024 compared to $127.6 million provided by operating activities in the three months ended March 31, 2023. The increase was the result mainly of (i) a $20.3 million increase in operating revenues, (ii) a $5.6 million decrease in dry-docking expenses, (iii) a $4.6 million change in working capital, (iv) a $4.3 million decrease in net finance cost and (v) a $0.9 million increase in dividend income, which were partially offset by a $10.0 million increase in operating expenses.

 

Net Cash Used in Investing Activities

 

Net cash flows used in investing activities increased by $117.3 million, to $123.4 million used in investing activities in the three months ended March 31, 2024 compared to $6.1 million used in investing activities in the three months ended March 31, 2023. The increase was mainly due to (i) a $100.6 million increase in advance payments for vessels under construction, (ii) a $14.6 million increase in advances and payments for vessel acquisitions, (iii) a $3.2 million increase in additions to vessel cost and (iv) a $3.2 million decrease in proceeds received from sale of vessels, which were partially offset by a $4.3 million payment for investments in affiliates in the three months ended March 31, 2023 compared to none in the three months ended March 31, 2024.

 

Net Cash Provided by/(Used in) Financing Activities

 

Net cash flows provided by/(used in) financing activities increased by $52.2 million, to $22.6 million provided by financing activities in the three months ended March 31, 2024 compared to $29.6 million used in financing activities in the three months ended March 31, 2022 mainly due to (i) a $55.0 million loan drawdown and (ii) a $6.6 million decrease in payments of long-term debt and leaseback obligations, which were partially offset by (i) a $5.6 million increase in finance costs, (ii) a $3.5 million increase in repurchase of our common stock and (iii) a $0.3 million increase in dividend payments on our common stock.

 

Non-GAAP Financial Measures

 

We report our financial results in accordance with U.S. generally accepted accounting principles (GAAP). Management believes, however, that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating our performance. See the table below for supplemental financial data and corresponding reconciliation to GAAP financial measures. The non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. The non-GAAP financial measures as presented below may not be comparable to similarly titled measures of other companies in the shipping or other industries.

 

EBITDA and Adjusted EBITDA

 

EBITDA represents net income before interest income and expense, taxes, depreciation, as well as amortization of deferred drydocking & special survey costs, amortization of assumed time charters, amortization of deferred realized losses of cash flow interest rate swaps, amortization of finance costs, debt discount and commitment fees. Adjusted EBITDA represents net income before interest income and expense, taxes other than withholding taxes on dividends received, depreciation, amortization of deferred drydocking & special survey costs, amortization of assumed time charters, amortization of deferred realized losses of cash flow interest rate swaps, amortization of finance costs, debt discount and commitment fees, gain on investments, gain on sale of vessels and stock-based compensation. We believe that EBITDA and Adjusted EBITDA assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. EBITDA and Adjusted EBITDA are also used: (i) by prospective and current customers as well as potential lenders to evaluate potential transactions; and (ii) to evaluate and price potential acquisition candidates. Our EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.

 

7

 

 

EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are: (i) EBITDA/Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; and (ii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA/Adjusted EBITDA do not reflect any cash requirements for such capital expenditures. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Because of these limitations, EBITDA/Adjusted EBITDA should not be considered as principal indicators of our performance.

 

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

 

   Three Months   Three Months 
   ended   ended 
   March 31, 2024   March 31, 2023 
         
   (In thousands) 
Net income  $150,498   $146,201 
Depreciation and amortization of right-of-use assets   33,863    31,529 
Amortization of deferred drydocking & special survey costs   5,452    3,835 
Amortization of assumed time charters   (3,498)   (6,536)
Amortization of deferred realized losses of cash flow interest rate swaps   903    893 
Amortization of finance costs, debt discount and commitment fees   1,273    1,451 
Interest income   (2,936)   (2,723)
Interest expense   2,627    6,029 
EBITDA   188,182    180,679 
Gain on investments   (10,979)   - 
Gain on sale of vessels   -    (1,639)
Adjusted EBITDA  $177,203   $179,040 

 

 

EBITDA increased by $7.5 million, to $188.2 million in the three months ended March 31, 2024 from $180.7 million in the three months ended March 31, 2023. This increase was mainly attributed to (i) a $11.9 million change in fair value of our investment and dividend income, (ii) a $12.9 million increase in operating revenues (excluding $3.0 million decrease in amortization of assumed time charters) and (iii) a $2.5 million decrease in equity loss on investments in the three months ended March 31, 2024, which were partially offset by (i) a $18.2 million increase in total operating expenses and (ii) a $1.6 million gain on sale of vessel in the three months ended March 31, 2023 compared to no such gain in the three months ended March 31, 2024.

 

Adjusted EBITDA decreased by $1.8 million, to $177.2 million in the three months ended March 31, 2024 from $179.0 million in the three months ended March 31, 2023. This decrease was mainly attributed to a $18.2 million increase in total operating expenses which were partially offset by (i) a $12.9 million increase in operating revenues (excluding $3.0 million decrease in amortization of assumed time charters), (ii) a $2.5 million decrease in equity loss on investments in the three months ended March 31, 2024 and (iii) a $0.9 million increase in dividend income. Adjusted EBITDA for the three months ended March 31, 2024 is adjusted for a $11.0 million change in fair value of our investment.

 

8

 

 

Net Income Reconciliation to Adjusted EBITDA per segment (in thousands):

 

  Three Months Ended  Three Months Ended 
  March 31, 2024  March 31, 2023 
  Container
Vessels
  Drybulk
Vessels
  Other  Total  Container
Vessels
  Drybulk
Vessels
  Other  Total 
Net income/(loss) $138,359  $337  $11,802  $150,498  $148,789   -  $(2,588) $146,201 
Depreciation and amortization of right-of-use assets  32,008   1,855   -   33,863   31,529   -   -   31,529 
Amortization of deferred drydocking & special survey costs  5,452   -   -   5,452   3,835   -   -   3,835 
Amortization of assumed time charters  (3,498)  -   -   (3,498)  (6,536)  -   -   (6,536)
Amortization of deferred finance costs, debt discount and commitment fees  1,273   -   -   1,273   1,451   -   -   1,451 
Amortization of deferred realized losses on interest rate swaps  903   -   -   903   893   -   -   893 
Interest income  (2,936)  -   -   (2,936)  (2,723)  -   -   (2,723)
Interest expense  2,627   -   -   2,627   6,029   -   -   6,029 
Change in fair value of investments  -   -   (10,979)  (10,979)  -   -   -   - 
Gain on sale of vessels  -   -   -   -   (1,639)  -   -   (1,639)
Adjusted EBITDA(1) $174,188  $2,192  $823  $177,203  $181,628   -  $(2,588) $179,040 

 

Time Charter Equivalent Revenues and Time Charter Equivalent US$/day per segment

 

Time charter equivalent revenues represent operating revenues less voyage expenses excluding commissions presented per container vessels segment and drybulk vessels segment separately. Time charter equivalent US$/per day (“TCE rate”) represents the average daily TCE rate of our container vessels segment and drybulk vessels segment calculated dividing time charter equivalent revenues of each segment by operating days of each segment. Operating days of each segment is calculated by deducting vessels off-hire days of each segment from total ownership days of each segment. TCE rate is a measure of the average daily net revenue performance of our vessels in each segment. TCE rate is a standard shipping industry performance measure used primarily to compare period to period changes in a shipping company’s performance despite changes in the mix of charter types i.e., voyage charters, time charters, bareboat charters under which its vessels may be employed between the periods. Our method of computing TCE rate may not necessarily be comparable to TCE rates of other companies due to differences in methods of calculation. We include TCE rate, a non- GAAP measure, as it provides additional meaningful information in conjunction with operating revenues, the most directly comparable GAAP measure, and it assists our management in making decisions regarding the deployment and use of our operating vessels and assists investors and our management in evaluating our financial performance.

 

9

 

 

Container vessels fleet utilization  

 

    First
Quarter
    First
Quarter
 
Vessel Utilization (No. of Days)   2024    2023 
Ownership Days  6,185   6,150 
Less Off-hire Days:        
Scheduled Off-hire Days  (67)  (150)
Other Off-hire Days  (99)  (44)
Operating Days(1)  6,019   5,956 
Vessel Utilization  97.3%  96.8%
         
Operating Revenues (in '000s of US$) $233,411  $243,574 
Less: Voyage Expenses excluding commissions (in '000s of US$)  (488)  (415)
Time Charter Equivalent Revenues (in '000s of US$)  232,923   243,159 
Time Charter Equivalent US$/per day $38,698  $40,826 
         

 

Drybulk vessels fleet utilization

 

    First
Quarter
    First
Quarter
 
Vessel Utilization (No. of Days)   2024    2023 
Ownership Days  637   - 
Less Off-hire Days:        
Scheduled Off-hire Days  (31)  - 
Other Off-hire Days  (10)  - 
Operating Days(1)  596   - 
Vessel Utilization  93.6%    
         
Operating Revenues (in '000s of US$) $20,038   - 
Less: Voyage Expenses excluding commissions (in '000s of US$)  (10,827)  - 
Time Charter Equivalent Revenues (in '000s of US$)  9,211   - 
Time Charter Equivalent US$/per day $15,455   - 

 

1.We define Operating Days as the total number of Ownership Days net of Scheduled off-hire days (days associated with scheduled repairs, drydockings or special or intermediate surveys or days) and net of off-hire days associated with unscheduled repairs or days waiting to find employment but including days our vessels were sailing for repositioning. The shipping industry uses Operating Days to measure the number of days in a period during which vessels actually generate revenues or are sailing for repositioning purposes. Our definition of Operating Days may not be comparable to that used by other companies in the shipping industry.

 

10

 

 

Credit Facilities

 

We, as borrower or guarantor, and certain of our subsidiaries, as borrowers or guarantors, have entered into a number of credit facilities in connection with financing the acquisition of certain vessels in our fleet. Our existing credit facilities are secured by, among other things, our vessels (as described below). The following summarizes certain terms of our credit facilities and our Senior Notes as of March 31, 2024:

 

Credit Facility   Outstanding
Principal
Amount
(in millions)
  Collateral Vessels
BNP Paribas/Credit Agricole $130.0 mil. Facility $95.00  The Wide Alpha, the Stephanie C, the Maersk Euphrates, the Wide Hotel, the Wide India and the Wide Juliet
Alpha Bank $55.25 mil. Facility $45.9  The Bremen and the Kota Santos
Syndicated $450.0 mil. Facility $55.0  The Hull No. C7100-7, the Hull No. C7100-8, the Hull No. HN4009, the Hull No. HN4010, the Hull No. HN4011, the Hull No. HN4012, the Hull No. CV5900-07 and the Hull No. CV5900-08
Citibank $382.5 mil. Revolving Credit Facility $-  The Express Berlin, the Express Rome, the Express Athens, the Hyundai Smart, the Hyundai Speed, the Hyundai Ambition, the Pusan C, the Le Havre, the Europe, the America, the CMA CGM Musset, the Racine (ex CMA CGM Racine), the CMA CGM Rabelais, the CMA CGM Nerval, the YM Maturity and the YM Mandate
Senior Notes $262.8  None

 

As of March 31, 2024, there was $326.25 million of remaining borrowing availability under our Citibank $382.5 mil. Revolving Credit Facility and $395.0 million under our Syndicated $450.0 million Facility. As of March 31, 2024, 43 of our container vessels and 7 Capesize bulk carriers were unencumbered. See Note 8 “Long-term Debt, net” to our unaudited condensed consolidated financial statements included in this report for additional information regarding our outstanding debt and the related repayment schedule.

 

Senior Notes

 

On February 11, 2021, we consummated an offering of $300 million aggregate principal amount of 8.500% Senior Notes due 2028 of Danaos Corporation, which we refer to as the Senior Notes. The Senior Notes are general senior unsecured obligations of Danaos Corporation.

 

The Senior Notes were issued pursuant to an Indenture, dated as of February 11, 2021, between the Company and Citibank, N.A., London Branch, as trustee, paying agent, registrar and transfer agent. The Senior Notes bear interest at a rate of 8.500% per year, payable in cash on March 1 and September 1 of each year, commencing September 1, 2021. The Senior Notes will mature on March 1, 2028.

 

In December 2022, we repurchased $37.2 million aggregate principal amount of our Senior Notes in a privately negotiated transaction. For additional details regarding the Senior Notes please refer to Note 8, “Long-term Debt, net” in the unaudited condensed consolidated financial statements included elsewhere in this report and “Item 5. Operating and Financial Review and Prospects –Senior Notes” in our Annual Report on Form 20-F for the year ended December 31, 2023 filed with the Securities and Exchange Commission on February 29, 2024.

 

Qualitative and Quantitative Disclosures about Market Risk

 

Interest Rate Swaps

 

In the past, we entered into interest rate swap agreements converting floating interest rate exposure into fixed interest rates in order to hedge our exposure to fluctuations in prevailing market interest rates, as well as interest rate swap agreements converting the fixed rate we paid in connection with certain of our credit facilities into floating interest rates in order to economically hedge the fair value of the fixed rate credit facilities against fluctuations in prevailing market interest rates. All of these interest rate swap agreements have expired and we do not currently have any outstanding interest rate swap agreements. Refer to Note 9, “Financial Instruments”, to our unaudited condensed consolidated financial statements included in this report.

 

11

 

 

Foreign Currency Exchange Risk

 

We did not enter into derivative instruments to hedge the foreign currency translation of assets or liabilities or foreign currency transactions during the three months ended March 31, 2024 and 2023.

 

Impact of Inflation and Interest Rates Risk on our Business

 

We continue to see near-term impacts on our business due to elevated inflation in the United States of America, Eurozone and other countries, including ongoing global prices pressures in the wake of the war in Ukraine, driving up energy and commodity prices, which continue to affect our operating expenses. Interest rates have increased rapidly and substantially as central banks in developed countries raise interest rates in an effort to subdue inflation. The eventual implications of tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for our business.

 

Capitalization and Indebtedness

 

The table below sets forth our consolidated capitalization as of March 31, 2024.

 

·on an actual basis; and

 

·on an as adjusted basis to reflect, in the period from April 1, 2024 to May 27, 2024, a $63.0 million drawdown on Syndicated $450.0 million Facility related to a delivery of a newbuilding vessel and repurchases of 15,163 shares of our common stock for an aggregate purchase price of $1.1 million.

 

Other than these adjustments, there have been no other material changes to our capitalization from debt or equity issuances, re-capitalizations, special dividends, or debt repayments as adjusted in the table below between April 1, 2024 and May 27, 2024.

 

  As of March 31, 2024 
  Actual  As adjusted 
  (US Dollars in thousands) 
Debt:      
Senior unsecured notes $262,766  $262,766 
BNP Paribas/Credit Agricole $130 mil. Facility  95,000   95,000 
Alpha Bank $55.25 mil. Facility  45,875   45,875 
Syndicated $450.0 mil. Facility  55,000   118,000 
Citibank $382.5 mil. Revolving Credit Facility  -   - 
Total debt (1)(2) $458,641  $521,641 
Stockholders’ equity:        
Preferred stock, par value $0.01 per share; 100,000,000 preferred shares authorized and none issued; actual and as adjusted  -   - 
Common stock, par value $0.01 per share; 750,000,000 shares authorized; 25,355,968 shares issued and 19,360,801 shares outstanding actual and 19,345,638 shares outstanding as adjusted  194   193 
Additional paid-in capital  687,634   686,544 
Accumulated other comprehensive loss  (74,813)  (74,813)
Retained earnings (3)  2,536,875   2,536,875 
Total stockholders’ equity  3,149,890   3,148,799 
Total capitalization $3,608,531  $3,670,440 

 

 

(1)All of the indebtedness reflected in the table, other than Danaos Corporation’s unsecured senior notes due 2028 ($262.8 million on an actual basis), is secured and is guaranteed by Danaos Corporation, in the case of leasing obligations of our subsidiaries ($45.9 million on an actual basis), or by our subsidiaries, in the case of indebtedness of Danaos Corporation ($150.0 million on an actual basis). See Note 8 “Long-Term Debt, net” to our unaudited condensed consolidated financial statements included elsewhere in this report.
(2)Total debt is presented gross of deferred finance costs, which amounted to $6.7 million.
(3)Does not reflect dividend of $0.80 per share of common stock declared by the Company payable on June 20, 2024 to holders of record as of June 11, 2024.

 

12

 

 

Our Fleet

 

The following table describes in detail our container vessels deployment profile as of May 27, 2024:

  

Vessel Details           Charter Arrangements  
                    Contracted       Extension Options (4)  
    Year   Size   Expiration of       Employment   Charter         Charter  
Vessel Name   Built   (TEU)   Charter (1)   Charterer   through (2)   Rate (3)   Period     Rate  
Hyundai Ambition   2012   13,100   April 2027   HMM Confidential (6)  

June 2024

April 2027

$

$

64,918

51,500

   + 6 months
+10.5 to 13.5 months
+10.5 to 13.5 months
 

$

$

$

51,500

51,500

51,500

 
Hyundai Speed   2012   13,100   April 2027   HMM Confidential (6)  

June 2024

April 2027

$

$

64,918

51,500

   + 6 months
+10.5 to 13.5 months
+10.5 to 13.5 months
 

$

$

$

 51,500

51,500

51,500

 
Hyundai Smart   2012   13,100   June 2027   Confidential (6)   June 2027 $ 54,000    + 3 to 26 months   $ 54,000  
Kota Primrose (ex Hyundai Respect)   2012   13,100   April 2027   Confidential (6)   April 2027 $ 54,000    + 3 to 26 months   $ 54,000  
Kota Peony (ex Hyundai Honour)   2012   13,100   March 2027   Confidential (6)   March 2027 $ 54,000    + 3 to 26 months   $ 54,000  
Express Rome   2011   10,100   April 2027   Hapag Lloyd Confidential (6)   September 2024
April 2027

$

$

30,000

37,000

   + 6 months   $ 37,000  
Express Berlin   2011   10,100   August 2026   Confidential (6)   August 2026 $ 33,000    + 4 months   $ 33,000  
Express Athens   2011   10,100   April 2027   Hapag Lloyd Confidential (6)   September 2024
April 2027

$

$

30,000

37,000

   + 6 months   $ 37,000  
Le Havre   2006   9,580   June 2028   Confidential (6)   June 2028 $ 58,500    + 4 months   $ 58,500  
Pusan C   2006   9,580   May 2028   Confidential (6)   May 2028 $ 58,500    + 4 months   $ 58,500  
Bremen   2009   9,012   January 2028   Confidential (6)   January 2028 $ 56,000    + 4 months   $ 56,000  
C Hamburg   2009   9,012   January 2028   Confidential (6)   January 2028 $ 56,000    + 4 months   $ 56,000  
Niledutch Lion   2008   8,626   May 2026   Niledutch   May 2026 $ 47,500    + 4 months   $ 47,500  
Belita   2006   8,533   July 2026   CMA CGM   July 2026 $ 45,000    + 6 months   $ 45,000  
Kota Manzanillo   2005   8,533   February 2026   PIL   February 2026 $ 47,500    + 4 months   $ 47,500  
CMA CGM Melisande   2012   8,530   January 2028   CMA CGM   August 2024 $ 43,000             
                Confidential (6)   January 2028 $ 34,500    + 3 to 13.5 months   $ 34,500  
CMA CGM Attila   2011   8,530   May 2027   Confidential (6)   May 2027 $ 34,500    + 3 to 13.5 months   $ 34,500  
CMA CGM Tancredi   2011   8,530   July 2027   Confidential (6)   July 2027 $ 34,500    + 3 to 13.5 months   $ 34,500  
CMA CGM Bianca   2011   8,530   September 2027   Confidential (6)   September 2027 $ 34,500    + 3 to 13.5 months   $ 34,500  
CMA CGM Samson   2011   8,530   November 2027   CMA CGM   June 2024 $ 43,000             
                Confidential (6)   November 2027 $ 34,500    + 3 to 13.5 months   $ 34,500  
America   2004   8,468   April 2028   Confidential (6)   April 2028 $ 56,000    + 4 months   $ 56,000  

 

13 

 

 

Vessel Details           Charter Arrangements  
Vessel Name   Built   (TEU)   Charter (1)   Charterer   through (2)   Rate (3)   Period     Rate  
                    Contracted       Extension Options (4)  
    Year   Size   Expiration of       Employment   Charter         Charter  
Europe   2004   8,468   May 2028   Confidential (6)   May 2028 $ 56,000    + 4 months   $ 56,000  
Kota Santos   2005   8,463   August 2026   PIL   August 2025 $ 55,000             
                    August 2026 $ 50,000    + 4 months   $ 55,000  
Catherine C   2024   8,010   May 2027   Confidential (6)   May 2027 $ 42,000    + 3 months   $ 42,000  
Interasia Accelerate   2024   7,165   April 2027   Confidential (6)   April 2027 $ 36,000    + 4 months
+ 22 to 26 months
 

$

$

36,000

40,000

 
CMA CGM Moliere   2009   6,500   March 2027   Confidential (6)   March 2027 $ 55,000    + 2 months   $ 55,000  
CMA CGM Musset   2010   6,500   September 2025   Confidential (6)   September 2025 $ 60,000    + 23 to 25 months   $ 55,000  
CMA CGM Nerval   2010   6,500   November 2025   Confidential (6)   November 2025 $ 40,000    + 23 to 25 months   $ 30,000  
CMA CGM Rabelais   2010   6,500   January 2026   Confidential (6)   January 2026 $ 40,000    + 23 to 25 months   $ 30,000  
Racine   2010   6,500   April 2026   Confidential (6)   April 2026 $ 32,500    + 2 months   $ 32,500  
YM Mandate   2010   6,500   January 2028   Yang Ming   January 2028 $ 26,890 (5) + 8 months   $ 26,890  
YM Maturity   2010   6,500   April 2028   Yang Ming   April 2028 $ 26,890 (5) + 8 months   $ 26,890  
Dimitra C   2002   6,402   February 2025   Confidential (6)   February 2025 $ 23,000    + 2 months   $ 23,000  
ZIM Savannah   2002   6,402   May 2025   ZIM Confidential (6)  

May 2024

May 2025

$

$

36,000

25,650

   + 2 months   $ 25,650  
Kota Lima   2002   5,544   November 2024   PIL   November 2024 $ 39,999    + 4 months   $ 39,999  
                            + 10 to 14 months   $ 27,500  
                            + 10 to 12 months   $ 24,000  
Suez Canal   2002   5,610   April 2026   Confidential (6)   April 2026 $ 27,500     + 2 months   $ 27,500  
Wide Alpha   2014   5,466   May 2025   ONE Confidential (6)   June 2024
May 2025

$

$

18,500

20,750

   + 3 months   $ 20,750  
Stephanie C   2014   5,466   June 2025   Confidential (6)   June 2025 $ 55,500    + 4 months   $ 55,500  
Maersk Euphrates   2014   5,466   July 2025   Maersk Confidential (6)   August 2024
July 2025

$

$

17,500

20,500

   + 3 months   $ 20,500  
Wide Hotel   2015   5,466   July 2025   ONE Confidential (6)   August 2024
July 2025

$

$

18,500

20,750

   + 3 months   $ 20,750  
Wide India   2015   5,466   November 2025   Confidential (6)   November 2025 $ 53,500    + 4 months   $ 53,500  
Wide Juliet   2015   5,466    September 2025   Confidential (6)   September 2025
$ 24,750    + 4 months
+ 7 to 9 months
+ 11 to 13 months
 

$

$

$

24,750

25,000

30,000

 

 

14

 

 

Vessel Details           Charter Arrangements  
                    Contracted       Extension Options (4)  
    Year   Size   Expiration of       Employment   Charter       Charter  
Vessel Name   Built   (TEU)   Charter (1)   Charterer   through (2)   Rate (3)   Period   Rate  
Rio Grande   2008   4,253   November 2026   OOCL Confidential (6)   November 2024
November 2026

$

$

17,000

30,000

   + 2 months $ 30,000  
Merve A   2008   4,253   September 2025   Confidential (6)   September 2025 $ 24,000    + 4 months $ 24,000  
Kingston   2008   4,253   June 2025   Confidential (6)   June 2025 $ 23,900    + 2 months $ 23,900  
Monaco (ex ZIM Monaco)   2009   4,253   October 2024   Confidential (6)   October 2024 $ 53,000    + 6 months $ 53,000  
Dalian   2009   4,253   March 2026   Confidential (6)   March 2026 $ 48,000    + 3 months $ 48,000  
ZIM Luanda   2009   4,253   August 2025   ZIM   August 2025 $ 30,000    + 4 months $ 30,000  
Seattle C   2007   4,253   October 2026   OOCL Confidential (6)   October 2024
October 2026

$

$

17,000

30,000

   + 2 months $ 30,000  
Vancouver   2007   4,253   November 2026
  OOCL Confidential (6)   November 2024
November 2026

$

$

17,000

30,000

   + 2 months $ 30,000  
Derby D   2004   4,253   January 2027   CMA CGM   January 2027 $ 36,275    + 3 months $ 36,275  
Tongala   2004   4,253   November 2024   Confidential (6)   November 2024 $ 53,000    + 6 months $ 53,000  
Dimitris C   2001   3,430   November 2025   CMA CGM   November 2025 $ 40,000    + 4 months $ 40,000  
Express Argentina   2010   3,400   September 2024   Confidential (6)   September 2024 $ 19,250    +3 months $ 19,250  
Express Brazil   2010   3,400   June 2025   CMA CGM   June 2025 $ 37,750    + 2 months $ 37,750  
Express France   2010   3,400   September 2025   CMA CGM   September 2025 $ 37,750    + 2 months $ 37,750  
Express Spain   2011   3,400   January 2025   Cosco   January 2025 $ 40,000    + 2 months $ 40,000  
Express Black Sea   2011   3,400   January 2025   Cosco   January 2025 $ 40,000    + 2 months $ 40,000  
Singapore   2004   3,314   March 2025   Confidential (6)   March 2025 $ 22,600    +2 months $ 22,600  
Colombo   2004   3,314   January 2025   Cosco   January 2025 $ 40,000    + 2 months $ 40,000  
Zebra   2001   2,602   November 2024   Maersk   November 2024 $ 32,000    + 4 months $ 32,000  
Artotina   2001   2,524   May 2025   Confidential (6)   May 2025 $ 28,000    + 2 months $ 28,000  
Phoenix D   1997   2,200   March 2025   Maersk   March 2025 $ 28,000    + 6 months $ 28,000  
Sprinter   1997   2,200   December 2024   Cosco   December 2024 $ 26,250    + 2 months $ 26,250  
Future   1997   2,200   December 2024   Cosco   December 2024 $ 26,250    + 2 months $ 26,250  
Advance   1997   2,200   January 2025   Cosco   January 2025 $ 26,250    + 2 months $ 26,250  
Bridge   1998   2,200   December 2024   Samudera   December 2024 $ 23,000    + 6 months $ 23,000  
Highway   1998   2,200   February 2025   Confidential (6)   February 2025 $ 14,000    + 2 months $ 14,000  
Progress C   1998   2,200   November 2024   Cosco   November 2024 $ 26,250    + 2 months $ 26,250  

 

1. Earliest date charters could expire. Most charters include options for the charterers to extend their terms as described in the “Extension Options” column.
2. This column indicates the date through which the charter rate set forth in the column to the immediate right of such date is payable. For charters with the same charter rate throughout the fixed term of the charter, this date is the same as the charter expiration date set forth in the “Expiration of Charter” column.
3. Gross charter rate, which does not include charter commissions.
4. At the option of the charterer.
5. Bareboat charter rate.
6. Charterer not disclosed due to confidentiality arrangements.

 

15

 

 

The specifications of our 12 contracted container vessels under construction as of May 27, 2024 are as follows:

 

                 Minimum       Extension Options(3) 
   Year   Size     Expected   Charter    Charter        Charter  
Hull Number  Built   (TEU)  Shipyard  Delivery Period   Duration(1)    rate(2)    Period    Rate(2)  
Hull No. C7100-8  2024   7,165  Dalian Shipbuilding  3rd Quarter 2024   3 Years  $36,000   

+ 4 months

+ 22 to 26 months

 

$

$

36,000

40,000

 
Hull No. HN4010  2024   8,010  Daehan Shipbuilding  2nd Quarter 2024   3 Years  $42,000   + 3 months  $42,000 
Hull No. HN4011  2024   8,010  Daehan Shipbuilding  3rd Quarter 2024   3 Years  $42,000   + 3 months  $42,000 
Hull No. HN4012  2024   8,010  Daehan Shipbuilding  3rd Quarter 2024   3 Years  $42,000   + 3 months  $42,000 
Hull No. CV5900-07  2024   6,014  Qingdao Yangfan Shipbuilding  1st Quarter 2025   2 Years  $35,000   + 3 months  $35,000 
Hull No. CV5900-08  2025   6,014  Qingdao Yangfan Shipbuilding  2nd Quarter 2025   2 Years  $35,000   + 3 months  $35,000 
Hull No. YZJ2023-1556  2026   8,258  Jiangsu NewYangzi Shipbuilding  3rd Quarter 2026   3 Years  $45,000   + 22 to 26 months   $45,000 
Hull No. YZJ2023-1557  2026   8,258  Jiangsu NewYangzi Shipbuilding  4th Quarter 2026   3 Years  $45,000   + 22 to 26 months   $45,000 
Hull No. YZJ2024-1612  2026   8,258  Jiangsu NewYangzi Shipbuilding  4th Quarter 2026   3 Years  $45,000   + 22 to 26 months   $45,000 
Hull No. YZJ2024-1613  2027   8,258  Jiangsu NewYangzi Shipbuilding  2nd Quarter 2027   3 Years  $45,000   + 22 to 26 months   $45,000 
Hull No. YZJ2024-1625  2027   8,258  Jiangsu NewYangzi Shipbuilding  3rd Quarter 2027   3 Years  $45,000   + 22 to 26 months   $45,000 
Hull No. YZJ2024-1626  2027   8,258  Jiangsu NewYangzi Shipbuilding  4th Quarter 2027   3 Years  $45,000   + 22 to 26 months   $45,000 

 

1. Earliest period charters could expire. Most charters include options for the charterers to extend their terms as described in the “Extension Options” column.
2. Gross charter rate, which does not include charter commissions.
3. At the option of the charterer.

 

The following table describes the details of our Capesize drybulk vessels as of May 27, 2024:

 

Vessel Name   Year
Built
    Capacity
(DWT)
 
Achievement  2011   175,966 
Genius  2012   175,580 
Ingenuity  2011   176,022 
Integrity  2010   175,966 
Peace  2010   175,858 
W Trader  2009   175,879 
E Trader  2009   175,886 
Guo May (1)  2011   176,536 
Xin Hang (1)  2010   178,043 
Star Audrey (1)  2011   175,125 

 

1. The vessels are expected to be delivered to us between June and July 2024.

 

16

 

 

Forward Looking Statements

 

Matters discussed in this report 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 our current views 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 Danaos Corporation believes 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, Danaos Corporation cannot assure you that it 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 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, our ability to operate profitably in the drybulk sector, performance of shipyards constructing our contracted newbuilding vessels, 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, including the conflict in Ukraine and related sanctions, the conflict in Israel and the Gaza Strip, potential disruption of shipping routes such as Houthi attacks in the Red Sea and the Gulf of Aden, due to accidents and political events or acts by terrorists.

 

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

 

17

 

 

 

 

INDEX TO FINANCIAL STATEMENTS

 

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 (unaudited) F-2
   
Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2024 and 2023 (unaudited) F-3
   
Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023 (unaudited) F-4
   
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited) F-5
   
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited) F-6
   
Notes to the Unaudited Condensed Consolidated Financial Statements F-7

 

F-1

 

 

DANAOS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(Expressed in thousands of United States Dollars, except share and per share amounts)

 

       As of 
       March 31,   December 31, 
   Notes   2024   2023 
ASSETS            
CURRENT ASSETS               
Cash and cash equivalents       $324,326   $271,809 
Accounts receivable, net        13,383    9,931 
Inventories        20,097    24,511 
Prepaid expenses        2,341    1,915 
Due from related parties   14    49,485    51,431 
Other current assets   6    153,499    142,173 
Total current assets        563,131    501,770 
NON-CURRENT ASSETS               
Fixed assets at cost, net of accumulated depreciation of $1,344,501 (2023: $1,311,689)   4    2,711,984    2,746,541 
Advances for vessels acquisition and vessels under construction   4    421,887    301,916 
Deferred charges, net   5    36,069    38,012 
Investments in affiliates   3    161    270 
Other non-current assets   6    76,518    72,627 
Total non-current assets        3,246,619    3,159,366 
Total assets       $3,809,750   $3,661,136 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY               
CURRENT LIABILITIES               
Accounts payable       $22,250   $22,820 
Accrued liabilities   7    15,182    20,458 
Current portion of long-term debt, net   8    20,495    21,300 
Unearned revenue        54,842    63,823 
Other current liabilities   14    32,053    39,759 
Total current liabilities        144,822    168,160 
                
LONG-TERM LIABILITIES               
Long-term debt, net   8    431,491    382,874 
Unearned revenue, net of current portion        49,275    60,134 
Other long-term liabilities   14    34,272    33,651 
Total long-term liabilities        515,038    476,659 
Total liabilities        659,860    644,819 
                
Commitments and Contingencies   10           
                
STOCKHOLDERS’ EQUITY               
Preferred stock (par value $0.01, 100,000,000 preferred shares authorized and not issued as of March 31, 2024 and December 31, 2023)   11    -    - 
Common stock (par value $0.01, 750,000,000 common shares authorized as of March 31, 2024 and December 31, 2023. 25,355,968 and 25,355,962 shares issued as of March 31, 2024 and December 31, 2023; and 19,360,801 and 19,418,696 shares outstanding as of March 31, 2024 and December 31, 2023)   11    194    194 
Additional paid-in capital        687,634    690,190 
Accumulated other comprehensive loss   9    (74,813)   (75,979)
Retained earnings        2,536,875    2,401,912 
Total stockholders’ equity        3,149,890    3,016,317 
Total liabilities and stockholders’ equity       $3,809,750   $3,661,136 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

F-2

 

 

DANAOS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Expressed in thousands of United States Dollars, except share and per share amounts)

 

       Three months ended 
       March 31, 
   Notes   2024   2023 
             
OPERATING REVENUES   4,12,15   $253,449   $243,574 
                
OPERATING EXPENSES               
Voyage expenses   14    (20,342)   (7,883)
Vessel operating expenses        (43,114)   (40,639)
Depreciation and amortization of right-of-use assets        (33,863)   (31,529)
Amortization of deferred drydocking and special survey costs   5    (5,452)   (3,835)
General and administrative expenses   14    (10,244)   (6,845)
Gain on sale of vessels   4    0    1,639 
Income From Operations        140,434    154,482 
                
OTHER INCOME (EXPENSES):               
Interest income        2,936    2,723 
Interest expense        (3,124)   (6,722)
Gain on investments   6    10,979    - 
Dividend income   6    932    - 
Equity loss on investments   3    (109)   (2,588)
Other finance expenses        (882)   (976)
Other income/(expenses), net        235    175 
Loss on derivatives   9    (903)   (893)
Total Other Income/(Expenses), net        10,064    (8,281)
                
Net Income       $150,498   $146,201 
                
EARNINGS PER SHARE               
Basic earnings per share       $7.75   $7.18 
Diluted earnings per share       $7.68   $7.18 
Basic weighted average number of common shares (in thousands)   13    19,412    20,349 
Diluted weighted average number of common shares (in thousands)   13    19,584    20,349 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

F-3

 

 

DANAOS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

(Expressed in thousands of United States Dollars)

 

       Three months ended 
       March 31, 
   Notes   2024   2023 
             
Net income for the period       $150,498   $146,201 
Other comprehensive income:               
Prior service cost of defined benefit plan        263    186 
Amortization of deferred realized losses on cash flow hedges   9    903    893 
Total Other Comprehensive Income        1,166    1,079 
Comprehensive Income       $151,664   $147,280 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

F-4

 

 

DANAOS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)

(Expressed in thousands of United States Dollars, except number of shares in thousands and per share amounts)

 

   Common Stock                 
               Accumulated         
   Number       Additional   other         
   of   Par   paid-in   comprehensive   Retained     
   shares   value   capital   loss   earnings   Total 
As of December 31, 2022    20,350   $203   $748,109   $(74,209)  $1,886,311   $2,560,414 
Net Income                    146,201    146,201 
Dividends ($0.75 per share)                    (15,262)   (15,262)
Repurchase of common stock    (41)       (2,196)           (2,196)
Issuance of common stock            1            1 
Net movement in other comprehensive income                1,079        1,079 
As of March 31, 2023    20,309   $203   $745,914   $(73,130)  $2,017,250   $2,690,237 

 

   Common Stock                 
               Accumulated         
   Number       Additional   other         
   of   Par   paid-in   comprehensive   Retained     
   shares   value   capital   loss   earnings   Total 
As of December 31, 2023    19,419   $194   $690,190   $(75,979)  $2,401,912   $3,016,317 
Net Income                    150,498    150,498 
Dividends ($0.80 per share)                    (15,535)   (15,535)
Repurchase of common stock    (58)       (4,132)           (4,132)
Stock based compensation            1,576            1,576 
Net movement in other comprehensive income                1,166        1,166 
As of March 31, 2024    19,361   $194   $687,634   $(74,813)  $2,536,875   $3,149,890 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

F-5

 

 

DANAOS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(Expressed in thousands of United States Dollars)

 

   Three months ended 
   March 31, 
   2024   2023 
Cash Flows from Operating Activities          
Net income  $150,498   $146,201 
           
Adjustments to reconcile net income to net cash provided by operating activities          
Depreciation and amortization of right-of-use assets   33,863    31,529 
Amortization of deferred drydocking and special survey costs   5,452    3,835 
Amortization of assumed time charters   (3,498)   (6,536)
Amortization of finance costs   497    693 
Gain on investments   (10,979)   - 
Payments for drydocking and special survey costs deferred   (4,169)   (9,742)
Gain on sale of vessels   -    (1,639)
Equity loss on investments   109    2,588 
Prior service cost and periodic cost   257    492 
Stock based compensation   1,576    - 
Amortization of deferred realized losses on interest rate swaps   903    893 
(Increase)/Decrease in          
Accounts receivable   (3,452)   (1,939)
Inventories   4,308    407 
Prepaid expenses   (426)   (160)
Due from related parties   1,946    2,083 
Other assets, current and non-current   6,059    (11,124)
Increase/(Decrease) in          
Accounts payable   (752)   (1,035)
Accrued liabilities   (5,476)   (4,050)
Unearned revenue, current and long-term   (16,342)   (21,257)
Other liabilities, current and long-term   (7,082)   (3,645)
Net Cash provided by Operating Activities   153,292    127,594 
           
Cash Flows from Investing Activities          
Vessels additions and advances   (124,127)   (5,736)
Proceeds/Advances for sale of vessels   716    3,914 
Investments in affiliates   -    (4,263)
Net Cash used in Investing Activities   (123,411)   (6,085)
           
Cash Flows from Financing Activities          
Proceeds from long-term debt   55,000    - 
Payments of long-term debt   (6,875)   (6,875)
Payments of leaseback obligation   -    (6,629)
Dividends paid   (15,535)   (15,262)
Repurchase of common stock   (4,129)   (581)
Finance costs   (5,825)   (250)
Net Cash provided by/(used in) Financing Activities   22,636    (29,597)
           
Net Increase in cash and cash equivalents   52,517    91,912 
Cash and cash equivalents at beginning of period   271,809    267,668 
Cash and cash equivalents at end of period  $324,326   $359,580 
Supplemental information: Cash paid for interest, net of amounts capitalized   8,157    11,534 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

F-6

 

 

DANAOS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1Basis of Presentation and General Information

 

The accompanying condensed consolidated financial statements (unaudited) have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The reporting and functional currency of Danaos Corporation and its subsidiaries (“Danaos” or the “Company”), is the United States Dollar.

 

Danaos Corporation, formerly Danaos Holdings Limited, was formed on December 7, 1998 under the laws of Liberia and is presently the sole owner of all outstanding shares of the companies listed below. Danaos Holdings Limited was redomiciled in the Marshall Islands on October 7, 2005. In connection with the redomiciliation, the Company changed its name to Danaos Corporation. On October 14, 2005, the Company filed and the Marshall Islands accepted Amended and Restated Articles of Incorporation. The authorized capital stock of Danaos Corporation is 750,000,000 shares of common stock with a par value of $0.01 and 100,000,000 shares of preferred stock with a par value of $0.01. Refer to Note 11, “Stockholders’ Equity”. The Company’s principal business is the acquisition and operation of vessels. Danaos conducts its operations through the vessel owning companies whose principal activity is the ownership and operation of container vessels and drybulk vessels that are under the exclusive management of a related party of the Company.

 

In the opinion of management, the accompanying condensed consolidated financial statements (unaudited) of Danaos and subsidiaries contain all adjustments necessary to state fairly, in all material respects, the Company’s condensed consolidated financial position as of March 31, 2024, the condensed consolidated results of operations for the three months ended March 31, 2024 and 2023 and the condensed consolidated cash flows for the three months ended March 31, 2024 and 2023. All such adjustments are deemed to be of a normal, recurring nature. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in Danaos’ Annual Report on Form 20-F for the year ended December 31, 2023. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the full year. The year-end condensed consolidated balance sheet data was derived from annual financial statements. These condensed consolidated financial statements do not include all disclosures required by accounting principles generally accepted in the United States of America.

 

The condensed consolidated financial statements (unaudited) have been prepared to reflect the consolidation of the companies listed below. The historical balance sheets and results of operations of the companies listed below have been reflected in the condensed consolidated balance sheets and condensed consolidated statements of income, comprehensive income, cash flows and stockholders’ equity at and for each period since their respective incorporation dates.

 

F-7

 

 

DANAOS CORPORATION

 NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

1Basis of Presentation and General Information (Continued)

 

As of March 31, 2024, Danaos included the vessel owning companies (the “Danaos Subsidiaries”) of container vessels and drybulk vessels listed below:

 

Container vessels:

Company  Date of Incorporation   Vessel Name  Year Built   TEU(1) 
Megacarrier (No. 1) Corp.    September 10, 2007   Kota Peony (ex Hyundai Honour)   2012    13,100 
Megacarrier (No. 2) Corp.    September 10, 2007   Kota Primrose (ex Hyundai Respect)   2012    13,100 
Megacarrier (No. 3) Corp.    September 10, 2007   Hyundai Smart   2012    13,100 
Megacarrier (No. 4) Corp.    September 10, 2007   Hyundai Speed   2012    13,100 
Megacarrier (No. 5) Corp.    September 10, 2007   Hyundai Ambition   2012    13,100 
CellContainer (No. 6) Corp.    October 31, 2007   Express Berlin   2011    10,100 
CellContainer (No. 7) Corp.    October 31, 2007   Express Rome   2011    10,100 
CellContainer (No. 8) Corp.    October 31, 2007   Express Athens   2011    10,100 
Karlita Shipping Co. Ltd.    February 27, 2003   Pusan C   2006    9,580 
Ramona Marine Co. Ltd.    February 27, 2003   Le Havre   2006    9,580 
Oceancarrier (No. 2) Corp.    October 15, 2020   Bremen   2009    9,012 
Oceancarrier (No. 3) Corp.    October 15, 2020   C Hamburg   2009    9,012 
Blackwell Seaways Inc.    January 9, 2020   Niledutch Lion   2008    8,626 
Oceancarrier (No. 1) Corp.    February 19, 2020   Kota Manzanillo   2005    8,533 
Springer Shipping Co.    April 29, 2019   Belita   2006    8,533 
Teucarrier (No. 5) Corp.    September 17, 2007   CMA CGM Melisande   2012    8,530 
Teucarrier (No. 1) Corp.    January 31, 2007   CMA CGM Attila   2011    8,530 
Teucarrier (No. 2) Corp.    January 31, 2007   CMA CGM Tancredi   2011    8,530 
Teucarrier (No. 3) Corp.    January 31, 2007   CMA CGM Bianca   2011    8,530 
Teucarrier (No. 4) Corp.    January 31, 2007   CMA CGM Samson   2011    8,530 
Oceanew Shipping Ltd.    January 14, 2002   Europe   2004    8,468 
Oceanprize Navigation Ltd.    January 21, 2003   America   2004    8,468 
Rewarding International Shipping Inc.    October 1, 2019   Kota Santos   2005    8,463 
Boxcarrier (No. 2) Corp.    June 27, 2006   CMA CGM Musset   2010    6,500 
Boxcarrier (No. 3) Corp.    June 27, 2006   CMA CGM Nerval   2010    6,500 
Boxcarrier (No. 4) Corp.    June 27, 2006   CMA CGM Rabelais   2010    6,500 
Boxcarrier (No. 5) Corp.    June 27, 2006   Racine   2010    6,500 
Boxcarrier (No. 1) Corp.    June 27, 2006   CMA CGM Moliere   2009    6,500 
Expresscarrier (No. 1) Corp.    March 5, 2007   YM Mandate   2010    6,500 
Expresscarrier (No. 2) Corp.    March 5, 2007   YM Maturity   2010    6,500 
Actaea Company Limited    October 14, 2014   Zim Savannah   2002    6,402 
Asteria Shipping Company Limited    October 14, 2014   Dimitra C   2002    6,402 
Averto Shipping S.A.    June 12, 2015   Suez Canal   2002    5,610 
Sinoi Marine Ltd.    June 12, 2015   Kota Lima   2002    5,544 
Oceancarrier (No. 4) Corp.    July 6, 2021   Wide Alpha   2014    5,466 
Oceancarrier (No. 5) Corp.    July 6, 2021   Stephanie C   2014    5,466 
Oceancarrier (No. 6) Corp.    July 6, 2021   Maersk Euphrates   2014    5,466 
Oceancarrier (No. 7) Corp.    July 6, 2021   Wide Hotel   2015    5,466 
Oceancarrier (No. 8) Corp.    July 6, 2021   Wide India   2015    5,466 
Oceancarrier (No. 9) Corp.    July 6, 2021   Wide Juliet   2015    5,466 
Continent Marine Inc.    March 22, 2006   Monaco (ex Zim Monaco)   2009    4,253 
Medsea Marine Inc.    May 8, 2006   Dalian   2009    4,253 
Blacksea Marine Inc.    May 8, 2006   Zim Luanda   2009    4,253 
Bayview Shipping Inc.    March 22, 2006   Rio Grande   2008    4,253 
Channelview Marine Inc.    March 22, 2006   Paolo   2008    4,253 
Balticsea Marine Inc.    March 22, 2006   Kingston   2008    4,253 
Seacarriers Services Inc.    June 28, 2005   Seattle C   2007    4,253 
Seacarriers Lines Inc.    June 28, 2005   Vancouver   2007    4,253 
Containers Services Inc.    May 30, 2002   Tongala   2004    4,253 
Containers Lines Inc.    May 30, 2002   Derby D   2004    4,253 

 

F-8

 

 

DANAOS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

1Basis of Presentation and General Information (Continued)

 

Company  Date of Incorporation   Vessel Name  Year Built   TEU(1) 
Boulevard Shiptrade S.A    September 12, 2013   Dimitris C   2001    3,430 
CellContainer (No. 4) Corp.    March 23, 2007   Express Spain   2011    3,400 
CellContainer (No. 5) Corp.    March 23, 2007   Express Black Sea   2011    3,400 
CellContainer (No. 1) Corp.    March 23, 2007   Express Argentina   2010    3,400 
CellContainer (No. 2) Corp.    March 23, 2007   Express Brazil   2010    3,400 
CellContainer (No. 3) Corp.    March 23, 2007   Express France   2010    3,400 
Wellington Marine Inc.    January 27, 2005   Singapore   2004    3,314 
Auckland Marine Inc.    January 27, 2005   Colombo   2004    3,314 
Vilos Navigation Company Ltd.    May 30, 2013   Zebra   2001    2,602 
Trindade Maritime Company    April 10, 2013   Amalia C (2)   1998    2,452 
Sarond Shipping Inc.    January 18, 2013   Artotina   2001    2,524 
Speedcarrier (No. 7) Corp.    December 6, 2007   Highway   1998    2,200 
Speedcarrier (No. 6) Corp.    December 6, 2007   Progress C   1998    2,200 
Speedcarrier (No. 8) Corp.    December 6, 2007   Bridge   1998    2,200 
Speedcarrier (No. 1) Corp.    June 28, 2007   Phoenix D   1997    2,200 
Speedcarrier (No. 2) Corp.    June 28, 2007   Advance   1997    2,200 
Speedcarrier (No. 3) Corp.    June 28, 2007   Stride (3)   1997    2,200 
Speedcarrier (No. 5) Corp.    June 28, 2007   Future   1997    2,200 
Speedcarrier (No. 4) Corp.    June 28, 2007   Sprinter   1997    2,200 
Vessels under construction                  
Boxsail (No. 1) Corp.    March 4, 2022   Hull No. C7100-7 (4)   2024    7,165 
Boxsail (No. 2) Corp.    March 4, 2022   Hull No. C7100-8   2024    7,165 
Teushipper (No. 1) Corp.    March 14, 2022   Hull No. HN4009 (4)   2024    8,010 
Teushipper (No. 2) Corp.    March 14, 2022   Hull No. HN4010   2024    8,010 
Teushipper (No. 3) Corp.    March 14, 2022   Hull No. HN4011   2024    8,010 
Teushipper (No. 4) Corp.    March 14, 2022   Hull No. HN4012   2024    8,010 
Boxsail (No. 3) Corp.    March 4, 2022   Hull No. CV5900-07   2025    6,014 
Boxsail (No. 4) Corp.    March 4, 2022   Hull No. CV5900-08   2025    6,014 
Boxline (No. 1) Corp.    June 7, 2023   Hull No. YZJ2023-1556   2026    8,258 
Boxline (No. 2) Corp.    June 7, 2023   Hull No. YZJ2023-1557   2026    8,258 
Boxline (No. 3) Corp.    February 2, 2024   Hull No. YZJ2024-1612   2026    8,258 
Boxline (No. 4) Corp.    February 2, 2024   Hull No. YZJ2024-1613   2027    8,258 
Boxline (No. 5) Corp.    March 8, 2024   Hull No. YZJ2024-1625   2027    8,258 
Boxline (No. 6) Corp.    March 8, 2024   Hull No. YZJ2024-1626   2027    8,258 

 

(1)Twenty-feet equivalent unit, the international standard measure for containers and container vessels capacity.

(2)The sale of Amalia C was completed in January 2023.

(3)The Stride was sold for scrap in March 2024.

(4)Subsequent to March 31, 2024, we took delivery of these vessels under construction from the shipyards.

 

Capesize drybulk vessels:

 

   Date of      Year     
Company  Incorporation   Vessel Name  Built   DWT(1) 
Bulk No. 1 Corp.    July 14, 2023   Integrity   2010    175,996 
Bulk No. 2 Corp.    July 14, 2023   Achievement   2011    175,850 
Bulk No. 3 Corp.    July 14, 2023   Ingenuity   2011    176,022 
Bulk No. 4 Corp.    July 14, 2023   Genius   2012    175,580 
Bulk No. 5 Corp.    July 14, 2023   Peace   2010    175,858 
Bulk No. 6 Corp.    September 15, 2023   W Trader   2009    175,879 
Bulk No. 7 Corp.    September 25, 2023   E Trader   2009    175,886 
Contracted drybulk vessels                  
Bulk No. 8 Corp.    January 31, 2024   Guo May (2)   2011    176,536 
Bulk No. 9 Corp.    February 2, 2024   Xin Hang (2)   2010    178,043 
Bulk No. 10 Corp.    February 15, 2024   Star Audrey (2)   2011    175,125 
                   

 

(1)DWT, dead weight tons, the international standard measure for drybulk vessels capacity.

(2)The vessels are expected to be delivered between June and July 2024.

F-9

 

 

DANAOS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

Impact of the wars in Ukraine and Gaza on the Company’s Business

 

The current conflict between Russia and Ukraine, and related sanctions imposed by the U.S., EU and others, adversely affect the crewing operations of the Company’s Manager, which has crewing offices in St. Petersburg, Odessa and Mariupol (damaged by the war), and trade patterns involving ports in the Black Sea or Russia, and as well as impacting world energy supply and creating uncertainties in the global economy, which in turn impact containership and drybulk demand. The extent of the impact will depend largely on future developments.

 

The war between Israel and Hamas in the Gaza Strip, potential disruption of shipping routes such as Houthi attacks in the Red Sea and the Gulf of Aden, has not affected the Company’s business to date; however, an escalation of these conflicts could have reverberations on the regional and global economies that could have the potential to adversely affect demand for cargoes and the Company’s business.

 

2Significant Accounting Policies

 

For a detailed discussion about the Company’s significant accounting policies, see Note 2 “Significant Accounting Policies” in the Company’s consolidated financial statements included in the Annual Report on Form 20-F for the year ended December 31, 2023 filed with the Securities and Exchange Commission on February 29, 2024. During the three months ended March 31, 2024, there were no significant changes made to the Company’s significant accounting policies.

 

3Investments in Affiliates

 

In March 2023, the Company invested $4.3 million in the common shares of a newly established company Carbon Termination Technologies Corporation (“CTTC”), incorporated in the Republic of the Marshall Islands, which represents the Company’s 49% ownership interest. CTTC currently engages in research and development of decarbonization technologies for the shipping industry. Equity method of accounting is used for this investment. The Company’s share of CTTC’s initial expenses amounted to $0.1 million and $4.0 million and is presented under “Equity loss on investments” in the condensed consolidated statement of income in the three months ended March 31, 2024 and the period ended December 31, 2023, respectively.

 

4Fixed Assets, Advances for Vessels Acquisition and Vessels under Construction

 

In 2023, the Company acquired 7 Capesize bulk carriers built in 2009 through 2012 that aggregate to 1,231,157 DWT for a total purchase price of $139.6 million. In February 2024, the Company entered into agreements to acquire three Capesize bulk carriers built in 2010 through 2011 that aggregate 529,704 DWT for a total purchase price of $79.9 million, out of which $14.6 million was advanced before March 31, 2024 and the remaining amount of $65.3 million is payable between April and July 2024, when these vessels are expected to be delivered to the Company.

 

In April 2022, the Company entered into contracts for the construction of four 8,000 TEU container vessels, of which one was delivered to us from the shipyard in May 2024, one is expected to be delivered in the second quarter of 2024 and two in the third quarter of 2024. In March 2022, the Company entered into contracts for the construction of two 7,100 TEU container vessels, out of which one was delivered to us from the shipyard in April 2024 and one is expected to be delivered in the third quarter of 2024. In April 2023, the Company entered into contracts for the construction of two 6,000 TEU container vessels with expected vessels delivery in 2025. In June 2023, the Company entered into contracts for the construction of two 8,200 TEU container vessels with expected vessels delivery in 2026. In February and March 2024, the Company entered into contracts for the construction of four 8,200 TEU container vessels with the latest eco design characteristics for an aggregate purchase price of $376.8 million. These container vessels are expected to be delivered to the Company in 2026 through 2027. The aggregate purchase price of the vessel construction contracts amounts to $1,211.7 million, out of which $95.5 million, $88.9 million and $184.9 million was paid in the three months ended March 31, 2024 and in the years ended December 31, 2023 and 2022, respectively.

 

F-10

 

 

4Fixed Assets, Advances for Vessels Acquisition and Vessels under Construction (Continued)

 

The remaining contractual commitments under 14 vessel construction contracts are analyzed as follows as of March 31, 2024 (in thousands):

 

Payments due by period ended    
December 31, 2024   $326,631 
December 31, 2025    134,238 
December 31, 2026    230,790 
December 31, 2027    150,720 
Total contractual commitments   $842,379 

 

Additionally, a supervision fee of $850 thousand per newbuilding vessel is payable to Danaos Shipping Company Limited (the “Manager”) over the construction period. Supervision fees totaling $0.4 million and $3.0 million were charged by the Manager and capitalized to the vessels under construction in the three months ended March 31, 2024 and in the year ended December 31, 2023, respectively. Interest expense amounting to $5.8 million, $17.4 million and $5.0 million was capitalized to the vessels under construction in the three months ended March 31, 2024 and in the years ended December 31, 2023 and 2022, respectively.

 

In March 2024, the Company sold for scrap the vessel Stride, which had been off-hire since January 8, 2024 due to damage from a fire in the engine room that was subsequently contained. The proceedings with the insurers are currently in progress. In December 2022, the Company entered into an agreement to sell the vessel Amalia C for an aggregate gross consideration of $5.1 million, which was delivered to its buyers in January 2023 resulting in a $1.6 million gain separately presented under “Gain on sale of vessels” in the condensed consolidated statement of income.

 

The Company assumed time charter liabilities related to its acquisition of vessels in the second half of 2021. The amortization of these assumed time charters amounted to $3.5 million and $6.5 million in the three months ended March 31, 2024 and March 31, 2023, respectively and is presented under “Operating revenues” in the condensed consolidated statement of income. The remaining unamortized amount of $1.0 million is presented under current “Unearned revenue” in the condensed consolidated balance sheet as of March 31, 2024 and is expected to be amortized into “Operating revenues” in April 2024.

 

The residual value (estimated scrap value at the end of the vessels’ useful lives) of the fleet was estimated at $537.8 million and $540.5 million as of March 31, 2024 and as of December 31, 2023, respectively. The Company has calculated the residual value of the vessels taking into consideration the 10 year average and the 5 year average of the scrap prices. The Company has applied uniformly the scrap value of $300 per ton for all vessels. The Company believes that $300 per ton is a reasonable estimate of future scrap prices, taking into consideration the cyclicality of the nature of future demand for scrap steel. Although the Company believes that the assumptions used to determine the scrap rate are reasonable and appropriate, such assumptions are highly subjective, in part, because of the cyclical nature of future demand for scrap steel.

 

F-11

 

 

DANAOS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

5            Deferred Charges, net

 

Deferred charges, net consisted of the following (in thousands):

 

    Drydocking and 
    Special Survey Costs 
As of January 1, 2023    $25,554 
Additions     31,121 
Amortization     (18,663)
As of December 31, 2023    38,012 
Additions     4,169 
Amortization     (5,452)
Write-off    (660)
As of March 31, 2024    $36,069 

 

The Company follows the deferral method of accounting for drydocking and special survey costs in accordance with accounting for planned major maintenance activities, whereby actual costs incurred are deferred and amortized on a straight-line basis over the period until the next scheduled survey, which is two and a half years. If special survey or drydocking is performed prior to the scheduled date, the remaining unamortized balances are immediately written off. Furthermore, when a vessel is drydocked in more than one reporting period, the respective costs are identified and recorded in the period in which they were incurred and not at the conclusion of the drydocking.

 

6Other Current and Non-current Assets

 

Other current and non-current assets consisted of the following (in thousands):

 

   As of   As of 
   March 31, 2024   December 31, 2023 
Straight-lining of revenue  $32,695   $36,495 
Marketable securities   97,007    86,029 
Claims receivable   17,152    12,026 
Other current assets   6,645    7,623 
Total other current assets  $153,499   $142,173 
           
Straight-lining of revenue  $57,357   $63,382 
Other non-current assets   19,161    9,245 
Total other non-current assets  $76,518   $72,627 

 

In June 2023, the Company acquired marketable securities of Eagle Bulk Shipping Inc., which was listed on the New York Stock Exchange (Ticker: EGLE) consisting of 1,552,865 shares of common stock for $68.2 million (out of which $24.4 million from Virage International Ltd., a related company). EGLE owned and operated a fleet of bulk carriers. As of March 31, 2024 and December 31, 2023, these marketable securities were fair valued at $97.0 million and $86.0 million, respectively and the Company recognized a $11.0 million gain and $17.9 million gain on these marketable securities reflected under “Gain on investments” in the condensed consolidated statements of income in the three months ended March 31, 2024 and the period ended December 31, 2023, respectively. Additionally, the Company recognized dividend income on these shares amounting to $0.9 million in the three months ended March 31, 2024 and $1.0 million in the period ended December 31, 2023. On December 11, 2023, Star Bulk Carriers Corp. (Ticker: SBLK), a NASDAQ-listed owner and operator of drybulk vessels, and EGLE announced that both companies had entered into a definitive agreement to combine in an all-stock merger, which was completed on April 9, 2024. Under the terms of the agreement, EGLE shareholders received 2.6211 shares of SBLK common stock in exchange for each share of EGLE common stock owned. As a result, as of the date of this report, the Company owns 4,070,214 shares of SBLK common stock.

 

F-12

 

 

DANAOS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

7            Accrued Liabilities

 

Accrued liabilities consisted of the following (in thousands):

 

   As of   As of 
   March 31, 2024   December 31, 2023 
Accrued interest  $2,781   $8,312 
Accrued dry-docking expenses   2,129    3,276 
Accrued expenses   10,272    8,870 
Total  $15,182   $20,458 

 

Accrued expenses mainly consisted of accruals related to the operation of the Company’s fleet as of March 31, 2024 and December 31, 2023.

 

8Long-Term Debt, net

 

Long-term debt, net consisted of the following (in thousands):

 

Credit Facility  Balance as of
March 31, 2024
   Balance as of
December 31, 2023
 
BNP Paribas/Credit Agricole $130 mil. Facility   $95,000   $100,000 
Alpha Bank $55.25 mil. Facility    45,875    47,750 
Syndicated $450.0 mil. Facility    55,000     
Citibank $382.5 mil. Revolving Credit Facility         
Senior unsecured notes    262,766    262,766 
Total long-term debt   $458,641   $410,516 
Less: Deferred finance costs, net    (6,655)   (6,342)
Less: Current portion    (20,495)   (21,300)
Total long-term debt net of current portion and deferred finance cost   $431,491   $382,874 

 

In March 2024, the Company entered into a syndicated loan facility agreement of up to $450 million (the “Syndicated $450.0 mil. Facility”), which is secured by eight of the Company’s container vessels under construction. An amount of $55.0 million was drawn down as of March 31, 2024. This facility is repayable in quarterly instalments up to September 2030. The facility bears interest at SOFR plus a margin of 1.85%.

 

In June 2022, the Company drew down $130.0 million of senior secured term loan facility from BNP Paribas and Credit Agricole, which is secured by six 5,466 TEU sister vessels acquired in 2021. This facility is repayable in eight quarterly instalments of $5.0 million, twelve quarterly instalments of $1.9 million together with a balloon payment of $67.2 million payable over five-year term. The facility bears interest at SOFR plus a margin of 2.16% as adjusted by the sustainability margin adjustment.

 

In December 2022, the Company early extinguished the remaining $437.75 million of the Citibank/Natwest $815 mil. Facility and replaced it with Citibank of up to $382.5 mil. Revolving Credit Facility, out of which nil is drawn down as of March 31, 2023 and with Alpha Bank $55.25 mil. Facility, which was drawn down in full. Citibank $382.5 mil. Revolving Credit Facility is reducing and repayable over 5 years in 20 quarterly reductions of $11.25 million each together with a final reduction of $157.5 million at maturity in December 2027. This facility bears interest at SOFR plus a margin of 2.0% and commitment fee of 0.8% on any undrawn amount and is secured by sixteen of the Company’s vessels. Alpha Bank $55.25 mil. Facility is repayable over 5 years with 20 consecutive quarterly instalments of $1.875 million each, together with a balloon payment of $17.75 million at maturity in December 2027. This facility bears interest at SOFR plus a margin of 2.3% and is secured by two of the Company’s vessels.

 

F-13

 

 

DANAOS CORPORATION

 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

8Long-Term Debt, net (Continued)

 

The Company incurred interest expense amounting to $8.5 million, out of which $5.8 million was capitalized in the three months ended March 31, 2024 compared to $9.5 million of interest expense incurred (including interest on leaseback obligations), out of which $3.5 million was capitalized in the three months ended March 31, 2023. As of March 31, 2024, there was a $326.25 million remaining borrowing availability under the Company’s Citibank $382.5 mil. Revolving Credit Facility and $395.0 million under the Syndicated $450.0 million Facility. Twenty-four of the Company’s vessels having a net carrying value of $1,503.5 million as of March 31, 2024 and eight container vessels under construction, were subject to first preferred mortgages as collateral to the Company’s credit facilities other than its senior unsecured notes.

 

On February 11, 2021, the Company issued in a private placement, $300.0 million aggregate principal amount of senior unsecured notes, which bear interest at a fixed rate of 8.50% per annum and mature on March 1, 2028. At any time on or after March 1, 2024, March 1, 2025 and March 1, 2026 the Company may elect to redeem all or any portion of the notes, respectively, at a price equal to 104.25%, 102.125% and 100%, respectively, of the principal amount being redeemed. Prior to March 1, 2024 the Company may redeem up to 35% of the aggregate principal of the notes from equity offering proceeds at a price equal to 108.50% within 90 days after the equity offering closing. In December 2022, the Company repurchased $37.2 million aggregate principal amount of its unsecured senior notes in a privately negotiated transaction. Interest payments on the notes are payable semi-annually commencing on September 1, 2021. $9.0 million of bond issuance costs were deferred and are recognized over the life of the bond through the effective interest method.

 

The scheduled debt maturities of long-term debt subsequent to March 31, 2024 are as follows (in thousands):

 

Payments due by period ended  Principal
repayments
 
March 31, 2025   $20,495 
March 31, 2026    18,160 
March 31, 2027    18,160 
March 31, 2028    358,301 
March 31, 2029    3,060 
March 31, 2030    40,465 
Total long-term debt   $458,641 

 

Alpha Bank $55.25 mil. Facility, Citibank $382.5 mil. Revolving Credit Facility and Syndicated $450.0 mil. Facility contain a requirement to maintain minimum fair market value of collateral vessels to loan value coverage of 120% and the BNP Paribas/Credit Agricole $130 mil. Facility of 125%. Additionally, these facilities require to maintain the following financial covenants:

 

(i)            minimum liquidity of $30.0 million;

(ii)           maximum consolidated debt (less cash and cash equivalents) to consolidated EBITDA ratio of 6.5x; and

(iii)          minimum consolidated EBITDA to net interest expense ratio of 2.5x.

 

Each of the credit facilities except for senior unsecured notes are collateralized by first preferred mortgages over the vessels financed, general assignment of all hire freights, income and earnings, the assignment of their insurance policies, as well as any proceeds from the sale of mortgaged vessels, stock pledges and benefits from corporate guarantees. The Company was in compliance with the financial covenants contained in the credit facilities agreements as of March 31, 2024 and December 31, 2023.

 

F-14

 

 

DANAOS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

9Financial Instruments

 

The following is a summary of the Company’s risk management strategies and the effect of these strategies on the Company’s condensed consolidated financial statements.

 

Interest Rate Risk: Interest rate risk arises on bank borrowings. The Company monitors the interest rate on borrowings closely to ensure that the borrowings are maintained at favorable rates.

 

Concentration of Credit Risk: Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents and trade accounts receivable. The Company places its temporary cash investments, consisting mostly of deposits, with established financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company’s investment strategy. The Company is exposed to credit risk in the event of non-performance by counterparties, however, the Company limits this exposure by diversifying among counterparties with high credit ratings. The Company depends upon a limited number of customers for a large part of its revenues. Credit risk with respect to trade accounts receivable is generally managed by the selection of customers among the major liner companies in the world and their dispersion across many geographic areas.

 

Fair Value: The carrying amounts reflected in the accompanying consolidated balance sheets of financial assets and liabilities (excluding long-term bank loans and certain other non-current assets) approximate their respective fair values due to the short maturity of these instruments. The fair values of long-term floating rate bank loans approximate the recorded values, generally due to their variable interest rates. The fair value of senior unsecured notes is measured based on quoted market prices. The fair value of marketable securities is measured based on the closing price of the securities on the NYSE.

 

a. Interest Rate Swap Hedges

 

The Company currently has no outstanding interest rate swaps agreements. However, in the past years, the Company entered into interest rate swap agreements with its lenders in order to manage its floating rate exposure. Certain variable-rate interests on specific borrowings were associated with vessels under construction and were capitalized as a cost of the specific vessels. In accordance with the accounting guidance on derivatives and hedging, the amounts related to realized gains or losses on cash flow hedges that have been entered into and qualified for hedge accounting, in order to hedge the variability of that interest, were recognized in accumulated other comprehensive loss and are reclassified into earnings over the depreciable life of the constructed asset, since that depreciable life coincides with the amortization period for the capitalized interest cost on the debt. An amount of $0.9 million was reclassified into earnings for the three months ended March 31, 2024 and 2023, representing its amortization over the depreciable life of the vessels. An amount of $3.6 million is expected to be reclassified into earnings within the next 12 months.

 

b. Fair Value of Financial Instruments

 

The Company determines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy.

 

Level I: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation of these items does not entail a significant amount of judgment.

 

Level II: Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.

 

Level III: Inputs that are unobservable. The Company did not use any Level 3 inputs as of March 31, 2024 and December 31, 2023.

 

F-15

 

 

DANAOS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

9Financial Instruments (Continued)

 

The estimated fair values of the Company’s financial instruments are as follows:

 

   As of March 31, 2024   As of December 31, 2023 
   Book Value   Fair Value   Book Value   Fair Value 
                 
   (in thousands of $) 
Cash and cash equivalents   $324,326   $324,326   $271,809   $271,809 
Marketable securities   $97,007   $97,007   $86,029   $86,029 
Secured long-term debt, including current portion(1)   $195,875   $195,875   $147,750   $147,750 
Unsecured long-term debt(1)   $262,766   $250,156   $262,766   $241,969 

 

The estimated fair value of the financial instruments that are measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows as of March 31, 2024:

 

   Fair Value Measurements as of March 31, 2024 
   Total   (Level I)   (Level II)   (Level III) 
                 
   (in thousands of $) 
Marketable securities   $97,007   $97,007   $   $ 

 

The estimated fair value of the financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows as of March 31, 2024:

 

   Fair Value Measurements as of March 31, 2024 
   Total   (Level I)   (Level II)   (Level III) 
                 
   (in thousands of $) 
Cash and cash equivalents   $324,326   $324,326   $   $ 
Secured long-term debt, including current portion(1)   $195,875   $   $195,875   $ 
Unsecured long-term debt(1)   $250,156   $250,156   $   $ 

 

The estimated fair value of the financial instruments that are measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows as of December 31, 2023:

 

   Fair Value Measurements as of December 31, 2023 
   Total   (Level I)   (Level II)   (Level III) 
                 
   (in thousands of $) 
Marketable securities   $86,029   $86,029   $   $ 

 

The estimated fair value of the financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows as of December 31, 2023:

 

   Fair Value Measurements as of December 31, 2023 
   Total   (Level I)   (Level II)   (Level III) 
                 
   (in thousands of $) 
Cash and cash equivalents   $271,809   $271,809   $   $ 
Secured long-term debt, including current portion(1)   $147,750   $   $147,750   $ 
Unsecured long-term debt(1)   $241,969   $241,969   $   $ 

 

 

(1)Secured and unsecured long-term debt, including current portion is presented gross of deferred finance costs of $6.7 million and $6.3 million as of March 31, 2024 and December 31, 2023, respectively. The fair value of the Company’s secured debt is estimated based on currently available debt with similar contract terms, interest rate and remaining maturities.

 

F-16

 

 

DANAOS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

10Commitments and Contingencies

 

There are no material legal proceedings to which the Company is a party or to which any of its properties are the subject, or other contingencies that the Company is aware of, other than routine litigation incidental to the Company’s business.

 

The Company has outstanding commitments under vessel construction contracts and contracts for the acquisition of secondhand drybulk vessels as of March 31, 2024, see the Note 4 “Fixed Assets, Advances for Vessels Acquisition and Vessels under Construction”.

 

11Stockholders’ Equity

 

In the period ended March 31, 2024, the Company declared a dividend of $0.80 per share of common stock amounting to $15.5 million, which was paid in March 2024. In the period ended March 31, 2023, the Company declared a dividend of $0.75 per share of common stock amounting to $15.3 million, which was paid in March 2023. The Company issued 6 and 10 shares of common stock pursuant to its dividends reinvestment plan in the periods ended March 31, 2024 and March 31, 2023, respectively.

 

In June 2022, the Company announced a share repurchase program of up to $100 million of the Company’s common stock. A $100 million increase to the existing share repurchase program, for a total aggregate amount of $200 million, was approved by the Company’s Board of Directors on November 10, 2023. The Company repurchased 57,901 shares of the Company’s common stock in the open market for $4.1 million in the three months ended March 31, 2024, 1,131,040 shares for $70.6 million in the year ended December 31, 2023 and 466,955 shares for $28.6 million in the period ended December 31, 2022.

 

As of April 18, 2008, the Board of Directors and the Compensation Committee approved incentive compensation of the Manager’s employees with its shares from time to time, after specific for each such time, decision by the compensation committee and the Board of Directors in order to provide a means of compensation in the form of free shares to certain employees of the Manager of the Company’s common stock. The plan was effective as of December 31, 2008. Pursuant to the terms of the plan, employees of the Manager may receive (from time to time) shares of the Company’s common stock as additional compensation for their services offered during the preceding period. The total amount of stock to be granted to employees of the Manager will be at the Company’s Board of Directors’ discretion only and there will be no contractual obligation for any stock to be granted as part of the employees’ compensation package in future periods. No restricted shares were issued and outstanding under this program as of March 31, 2024 and December 31, 2023.

 

The aggregate number of shares of common stock for which awards may be granted under the Plan shall not exceed 1,000,000 shares plus the number of unvested shares granted before August 2, 2019. The equity awards may be granted by the Company’s Compensation Committee or Board of Directors under its amended and restated 2006 equity compensation plan. Awards made under the Plan that have been forfeited, cancelled or have expired, will not be treated as having been granted for purposes of the preceding sentence.

 

On November 10, 2023, the Company granted 100,000 fully vested shares as well as two tranches of 100,000 shares each that will vest as of December 31, 2024 and December 31, 2025, respectively, to the Manager under the amended and restated management agreement with the Manager, refer to Note 14 “Related Party Transactions”. The fair value of shares granted was calculated based on the closing trading price of the Company’s shares at the grant date of $63.40. An amount of $1.6 million was expensed in the three months ended March 31, 2024 and a total of $6.3 million is expected to be recognized as stock based compensation to the Manager in 2024 and 2025, respectively.

 

F-17

 

 

DANAOS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

11Stockholders’ Equity (Continued)

 

The Company has also established the Directors Share Payment Plan under its 2006 equity compensation plan. The purpose of the plan is to provide a means of payment of all or a portion of compensation payable to directors of the Company in the form of Company’s Common Stock. The plan was effective as of April 18, 2008. Each member of the Board of Directors of the Company may participate in the plan. Pursuant to the terms of the plan, directors may elect to receive in Common Stock all or a portion of their compensation. Following December 31 of each year, the Company delivers to each Director the number of shares represented by the rights credited to their Share Payment Account during the preceding calendar year. During the three months ended March 31, 2024 and March 31, 2023, none of the directors elected to receive their compensation in Company shares.

 

12Lease Arrangements

 

Charters-out

 

As of March 31, 2024, the Company generated leasing operating revenues from its 67 container vessels on time charter or bareboat charter agreements and 2 drybulk vessels on short-term time charter agreements, with remaining terms ranging from less than one year to June 2028. Additionally, the Company contracted 3-year time charter agreements for six of its fourteen container vessels under construction as of March 31, 2024. Under the terms of the charter party agreements, most charterers have options to extend the duration of contracts ranging from less than one year to three years after the expiration of the contract. The Company determines fair value of its vessels at the lease commencement date and at the end of lease term for lease classification with the assistance from valuations obtained by third party independent shipbrokers. The Company manages its risk associated with the residual value of its vessels after the expiration of the charter party agreements by seeking multi-year charter arrangements for its vessels.

 

In May 2022, the Company received $238.9 million of charter hire prepayment related to charter contracts for 15 of the Company’s vessels, representing partial prepayment of charter hire payable up to January 2027. This charter hire prepayment is recognized in revenue through the remaining period of each charter party agreement, in addition to the contracted future minimum payments reflected in the below table. As of March 31, 2024, the outstanding balances of the current and non-current portion of unearned revenue in relation to this prepayment amounted to $44.0 million and $49.3 million, respectively. As of December 31, 2023, the outstanding balances of the current and non-current portion of unearned revenue in relation to this prepayment amounted to $44.2 million and $60.1 million, respectively.

 

The future minimum payments, expected to be received on non-cancellable time charters and bareboat charters classified as operating leases consisted of the following as of March 31, 2024 (in thousands):

 

Remainder of 2024    $645,778 
2025    671,319 
2026    473,973 
2027    277,492 
2028    35,354 
Total future rentals    $2,103,916 

 

Rentals from time charters are not generally received when a vessel is off-hire, including time required for normal periodic maintenance of the vessel. In arriving at the future minimum rentals, an estimated time off-hire to perform periodic maintenance on each vessel has been deducted, although there is no assurance that such estimate will be reflective of the actual off-hire in the future.

 

F-18

 

 

DANAOS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

13Earnings per Share

 

The following table sets forth the computation of basic and diluted earnings per share:

 

   Three months ended 
   March 31, 2024   March 31, 2023 
         
   (in thousands) 
Numerator:        
Net income  $150,498   $146,201 
           
Denominator (number of shares in thousands):          
Basic weighted average common shares outstanding   19,412    20,349 
Effect of dilutive securities:          
  Dilutive effect of non-vested shares   172    - 
Diluted weighted average common shares outstanding   19,584    20,349 

 

14Related Party Transactions

 

On November 10, 2023, the Company entered into an amended and restated management agreement with Danaos Shipping Company Limited (“the Manager”), extending the term from December 31, 2024 to December 31, 2025. Under this agreement, the Company pays to the Manager the following fees in 2024: (i) an annual management fee of $2.0 million and 100,000 shares of the Company’s common stock, payable annually, (ii) a daily vessel management fee of $475 for vessels on bareboat charter, pro-rated for the number of calendar days the Company owns each vessel, (iii) a daily vessel management fee of $950 for vessels on time charter and voyage charter, pro-rated for the number of calendar days the Company owns each vessel, (iv) a fee of 1.25% on all freight, charter hire, ballast bonus and demurrage for each vessel, (v) a fee of 1.0% based on the contract price of any vessel bought or sold by it on the Company’s behalf, including newbuilding contracts, and (vi) a flat fee of $850 thousand per newbuilding vessel, which is capitalized to the newbuilding cost, for the on premises supervision of any newbuilding contracts by selected engineers and others of its staff.

 

Management fees to the Manager amounted to $6.9 million and $5.2 million in the three months ended March 31, 2024 and 2023, respectively, and are presented under “General and administrative expenses” in the condensed consolidated statements of income.

 

Commissions to the Manager amounted to $3.0 million and $2.8 million in the three months ended March 31, 2024 and 2023, respectively and are presented under “Voyage expenses” in the condensed consolidated statements of income. Additionally, supervision fees for vessels under construction totaling $0.4 million and $3.0 million were charged by the Manager and capitalized to vessels under construction costs in the three months ended March 31, 2024 and the year ended December 31, 2023, respectively.

 

The balance “Due from related parties” in the condensed consolidated balance sheets totaling $49.5 million and $51.4 million as of March 31, 2024 and December 31, 2023, respectively, represents advances to the Manager on account of the vessels’ operating and other expenses. Defined benefit obligation for the executive officers of $13.3 million is presented under “Other long-term liabilities” in the condensed consolidate balance sheets as of March 31, 2024 and December 31, 2023. The Company recognized prior service cost and periodic cost of this defined benefit executive retirement plan amounting to $0.3 million and $0.5 million in the three months ended March 31, 2024 and March 31, 2023, respectively.

 

An amount of $0.1 million and nil was due to executive officers and is presented under “Accounts payable” in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023, respectively.

 

F-19

 

 

DANAOS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

15Operating Revenue

 

Operating revenue from time charters and bareboat charters and voyage charters for the three months ended March 31, 2024 and 2023, were as follows:

 

   Three months ended 
   March 31, 2024   March 31, 2023 
Time charters and bareboat charters  $235,516   $243,574 
Voyage charters   17,933    - 
Total Revenue  $253,449   $243,574 

 

As of March 31, 2024 and December 31, 2023, the Company had accounts receivable from voyage charter agreements amounting to $1.1 million and $1.0 million, respectively. The charter hire received in advance from voyage charter agreements amounting to nil and $2.0 million is presented under current “Unearned revenue” as of March 31, 2024 and December 31, 2023, respectively. Unearned revenue as of December 31, 2023 was recognized in earnings in the three months ended March 31, 2024 as the performance obligations were satisfied in that period.

 

16Segments

 

Until the acquisition of the drybulk vessels in 2023, the Company reported financial information and evaluated its operations by total charter revenues. Since 2023, for management purposes, the Company is organized based on operating revenues generated from container vessels and drybulk vessels and has two reporting segments: (1) a container vessels segment and (2) a drybulk vessels segment. The container vessels segment owns and operates container vessels which are primarily chartered on multi-year, fixed-rate time charter and bareboat charter agreements. The drybulk vessels segment owns and operates drybulk vessels to provide drybulk commodities transportation services.

 

The Company’s chief operating decision maker monitors and assesses the performance of the container vessels segment and the drybulk vessels segment based on net income. Items included in the applicable segment’s net income are directly allocated to the extent that the items are directly or indirectly attributable to the segments. With regards to the items that are allocated by indirect calculations, their allocation is commensurate to the utilization of key resources. The Other segment includes components that are not allocated to any of the Company’s reportable segments and includes investments in an affiliate accounted for using the equity method accounting and investments in marketable securities.

 

The following table summarizes the Company’s selected financial information for the three months ended March 31, 2024, by segment (in thousands):

 

   Container vessels segment   Drybulk vessels segment   Other   Total 
Operating revenues  $233,411   $20,038    -   $253,449 
Voyage expenses   (8,280)   (12,062)   -    (20,342)
Vessel operating expenses   (38,162)   (4,952)   -    (43,114)
Depreciation   (32,008)   (1,855)   -    (33,863)
Amortization of deferred drydocking and special survey costs   (5,452)   -    -    (5,452)
Interest income   2,936    -    -    2,936 
Interest expenses   (3,124)   -    -    (3,124)
Equity loss on investment   -    -    (109)   (109)
Net Income  $138,359   $337   $11,802   $150,498 

 

   Container vessels segment   Drybulk vessels segment   Other   Total 
 Total assets  $3,531,062   $181,520   $97,168   $3,809,750 

 

In the three months ended March 31, 2023, there was no drybulk vessel segment. Net income from container vessels segment was $148,789 thousand, which excludes equity loss on investments of $(2,588) thousand.

 

F-20

 

 

DANAOS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

17Subsequent Events

 

In April and May 2024, the Company took delivery of the container vessels under construction Hull No. C7100-7 and Hull No. HN 4009 and named the vessels Interasia Accelerate and Catherine C, respectively.

 

In April 2024, the Company drew down $63.0 million on Syndicated $450.0 million Facility related to a delivery of its newbuilding vessel Catherine C.

 

The Company has declared a dividend of $0.80 per share of common stock payable on June 20, 2024, to holders of record on June 11, 2024.

 

Subsequent to March 31, 2024, the Company repurchased 15,163 shares of its common stock in the open market for $1.1 million under its previously announced share repurchase program.

 

F-21

 

 

Exhibit 99.2

 

Dated 19 March 2024

 

DANAOS CORPORATION

as Borrower

 

with

CITIBANK, N.A., LONDON BRANCH

as Co-ordinator

 

and

 

CITIBANK, N.A., LONDON BRANCH

BNP PARIBAS

and

KFW IPEX-BANK GMBH

as Mandated Lead Arrangers and Bookrunners

 

and

 

ALPHA BANK S.A.

as Mandated Lead Arranger

 

with

CITIBANK EUROPE PLC, UK BRANCH

as Agent

 

CITIBANK, N.A., LONDON BRANCH

as Security Agent

 

THE FINANCIAL INSTITUTIONS LISTED IN SCHEDULE 1

as Lenders

 

guaranteed by

THE ENTITIES LISTED IN SCHEDULE 1

 

FACILITY AGREEMENT

for a

$450,000,000 Loan Facility

 

 

Contents

 

Clause Page

 

Section 1 - Interpretation 1
     
1 Definitions and interpretation 1
     
Section 2 - The Facility 29
     
2 The Facility 29
     
3 Purpose 30
     
4 Conditions of Utilisation 30
     
Section 3 - Utilisation 31
     
5 Utilisation 31
     
Section 4 - Repayment, Prepayment and Cancellation 34
     
6 Repayment 34
     
7 Illegality, prepayment and cancellation 36
     
8 Restrictions 39
     
Section 5 - Costs of Utilisation 41
     
9 Interest 41
     
10 Interest Periods 42
     
11 Changes to the calculation of interest 42
     
12 Fees 43
     
Section 6 - Additional Payment Obligations 44
     
13 Tax gross-up and indemnities 44
     
14 Increased costs 48
     
15 Other indemnities 49
     
16 Mitigation by the Lenders 53
     
17 Costs and expenses 54
     
Section 7 - Guarantee 56
     
18 Guarantee and indemnity 56
     
Section 8 - Representations, Undertakings and Events of Default 60
     
19 Representations 60
     
20 Information undertakings 67

 

 

21 Financial covenants 71
     
22 General undertakings 74
     
23 Dealings with Ship 78
     
24 Condition and operation of Ship 81
     
25 Insurance 85
     
26 Minimum security value 89
     
27 Chartering undertakings 92
     
28 Bank accounts 93
     
29 Business restrictions 94
     
30 Events of Default 97
     
Section 9 - Changes to Parties 103
     
31 Changes to the Lenders 103
     
32 Changes to the Obligors 107
     
Section 10 - The Finance Parties 108
     
33 Roles of Agent, Security Agent and Arranger 108
     
34 Trust and security matters 120
     
35 Enforcement of Transaction Security 125
     
36 Application of proceeds 126
     
37 Conduct of business by the Finance Parties 129
     
38 Sharing among the Finance Parties 129
     
Section 11 - Administration 130
     
39 Payment mechanics 130
     
40 Set-off 133
     
41 Notices 133
     
42 Calculations and certificates 135
     
43 Partial invalidity 136
     
44 Remedies and waivers 136
     
45 Amendments and waivers 136
     
46 Confidential Information 143
     
47 Counterparts 147

 

 

48 Contractual recognition of bail-in 147
     
Section 12 - Governing Law and Enforcement 148
     
49 Governing law 148
     
50 Enforcement 148
     
Schedule 1 The original parties 149
     
Schedule 2 Ship Information 159
     
Schedule 3 Conditions precedent 167
     
Schedule 4 Utilisation Request 172
     
Schedule 5 Selection Notice 173
     
Schedule 6 Form of Transfer Certificate 174
     
Schedule 7 Form of Compliance Certificate 176
     
Schedule 8 Forms of Notifiable Debt Purchase Transaction Notice 177
     
Schedule 9 Reference Rate Terms 179
     
Schedule 10 Daily Non-Cumulative Compounded RFR Rate 181
     
Schedule 11 Cumulative Compounded RFR Rate 183

 

 

THIS AGREEMENT is dated 19 March 2024, and made between:

 

(1)DANAOS CORPORATION whose details are set out in Schedule 1 (The original parties) as borrower (the Borrower);

 

(2)THE ENTITIES listed in Schedule 1 (The original parties) as guarantors (the Guarantors);

 

(3)CITIBANK, N.A., LONDON BRANCH as co-ordinator (the Co-ordinator);

 

(4)CITIBANK, N.A., LONDON BRANCH, BNP PARIBAS and KFW IPEX-BANK GMBH as mandated lead arrangers and as bookrunners and ALPHA BANK S.A. as mandated lead arranger (whether acting individually or together, in any such capacity, the Arranger);

 

(5)THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The original parties) as Lenders (the Original Lenders);

 

(6)CITIBANK EUROPE PLC, UK BRANCH as agent for and on behalf of certain of the other Finance Parties (the Agent); and

 

(7)CITIBANK, N.A., LONDON BRANCH as security agent and trustee for and on behalf of the other Finance Parties (the Security Agent).

 

IT IS AGREED as follows:

 

Section 1 - Interpretation

 

1Definitions and interpretation

 

1.1Definitions

 

In this Agreement and (unless otherwise defined in the relevant Finance Document) the other Finance Documents:

 

Account means any bank account, deposit or certificate of deposit opened, made or established in accordance with clause 28 (Bank accounts).

 

Account Bank means, in relation to any Account, Citibank, N.A., London Branch, acting through its office at Citigroup Centre, Canada Square, London E14 5LB, England or another bank or financial institution approved by the Majority Lenders at the request of the Borrower.

 

Account Holder(s) means, in relation to any Account, each Obligor in whose name that Account is held.

 

Account Security means, in relation to an Account, a first ranking deed or other instrument by the relevant Account Holder(s) in favour of the Security Agent or, as the case may be, the Finance Parties in an agreed form conferring a Security Interest over that Account.

 

Accounting Principles has the meaning given to that term in clause 21.2 (Financial definitions).

 

Accounting Reference Date means 31 December or such other date as may be approved by the Lenders.

 

Additional Business Day means any day specified as such in the Reference Rate Terms.

 

Advance A means a borrowing of a part of the Total Commitments by the Borrower up to the Ship Commitment in respect of Ship A, which is to be made available in relation to Ship A, or (as the context may require) the outstanding principal amount of such borrowing.

 

1

 

 

Advance B means a borrowing of a part of the Total Commitments by the Borrower up to the Ship Commitment in respect of Ship B, which is to be made available in relation to Ship B, or (as the context may require) the outstanding principal amount of such borrowing.

 

Advance C means a borrowing of a part of the Total Commitments by the Borrower up to the Ship Commitment in respect of Ship C, which is to be made available in relation to Ship C, or (as the context may require) the outstanding principal amount of such borrowing.

 

Advance D means a borrowing of a part of the Total Commitments by the Borrower up to the Ship Commitment in respect of Ship D, which is to be made available in relation to Ship D, or (as the context may require) the outstanding principal amount of such borrowing.

 

Advance E means a borrowing of a part of the Total Commitments by the Borrower up to the Ship Commitment in respect of Ship E, which is to be made available in relation to Ship E, or (as the context may require) the outstanding principal amount of such borrowing.

 

Advance F means a borrowing of a part of the Total Commitments by the Borrower up to the Ship Commitment in respect of Ship F, which is to be made available in relation to Ship F, or (as the context may require) the outstanding principal amount of such borrowing.

 

Advance G means a borrowing of a part of the Total Commitments by the Borrower up to the Ship Commitment in respect of Ship G, which is to be made available in relation to Ship G, or (as the context may require) the outstanding principal amount of such borrowing.

 

Advance H means a borrowing of a part of the Total Commitments by the Borrower up to the Ship Commitment in respect of Ship H, which is to be made available in relation to Ship H, or (as the context may require) the outstanding principal amount of such borrowing.

 

Advances means Advance A, Advance B, Advance C, Advance D, Advance E, Advance F, Advance G and Advance H, and Advance means any or all of them.

 

Affiliate means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

 

Agent includes any person who may be appointed as such under the Finance Documents.

 

Approved Exchange means NYSE or NASDAQ or any other reputable national stock exchange approved by all the Lenders.

 

Approved Flag State means each of the Republic of Liberia, the Republic of Malta, the Republic of Cyprus, the Republic of Panama, the Republic of the Marshall Islands and the Hellenic Republic.

 

Article 55 BRRD means Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms.

 

Assignable Charter means, in relation to a Ship, any charter commitment for that Ship (including the Charter in relation to that Ship), made or (as the context may require) to be made from time to time between the relevant Owner as owner and any person as charterer or counterparty of such Owner thereunder and which is capable of lasting 12 months or longer (but including any options to extend or renew contained therein) and Assignable Charters means together all or any of them.

 

Associate has the meaning given to that term in section 435 of the Insolvency Act 1986 of England and Wales, provided that only sub-sections (2) and (5) of such section (and any reference to the term "associate" in such sub-section (5) shall be a reference to such term as defined in sub-section (2)) shall apply insofar as it relates to the definition of Coustas Family.

 

Auditors means one of PricewaterhouseCoopers, Ernst & Young, KPMG or Deloitte & Touche or another approved firm.

 

2

 

 

Authorisation means any authorisation, consent, concession, approval, resolution, licence, exemption, filing, notarisation or registration.

 

Available Commitment means a Lender’s Commitment minus the amount of its participation in the Loan.

 

Available Facility means the aggregate for the time being of all the Lenders’ Available Commitments.

 

Backstop Date means, in relation to a Ship, the date identified as such in Schedule 2 (Ship Information) or such other later date approved by all the Lenders (in each case) representing the latest date by which a Ship can be contractually delivered under the relevant Building Contract to the relevant Owner taking into account "permissible delays" thereunder (as such term is referred to in each applicable Building Contract).

 

Bail-In Action means the exercise of any Write-down and Conversion Powers.

 

Bail-In Legislation means:

 

(a)in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;

 

(b)in relation to any state other than such an EEA Member Country and the United Kingdom, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation; and

 

(c)in relation to the United Kingdom, the UK Bail-In Legislation.

 

Balloon Instalment in respect of each Advance shall have the meaning given to it in clause 6.2 (Scheduled repayment of Facility).

 

Basel II Accord means the "International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in June 2004 as updated prior to, and in the form existing on, the date of this Agreement, excluding any amendment thereto arising out of the Basel III Accord or Reformed Basel III.

 

Basel II Approach means, in relation to any Finance Party, either the Standardised Approach or the relevant Internal Ratings Based Approach (each as defined in the Basel II Regulations applicable to such Finance Party) adopted by that Finance Party (or any of its Affiliates) for the purposes of implementing or complying with the Basel II Accord.

 

Basel II Regulation means:

 

(a)any law or regulation in force as at the date hereof implementing the Basel II Accord (including the relevant provisions of CRR and CRR II) to the extent only that such law or regulation re-enacts and/or implements the requirements of the Basel II Accord but excluding any provision of such law or regulation implementing the Basel III Accord or Reformed Basel III; and

 

(b)any Basel II Approach adopted by a Finance Party or any of its Affiliates.

 

Basel III Accord means, together:

 

(a)the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;

 

3

 

 

(b)the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

 

(c)any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III",

 

other than, in each such case, the agreements, rules, guidance and standards set out in Reformed Basel III as amended, supplemented or restated after the date of this Agreement.

 

Basel III Increased Cost means an Increased Cost which is attributable to the implementation or application of or compliance with any Basel III Regulation (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates).

 

Basel III Regulation means any law or regulation implementing the Basel III Accord (including the relevant provisions of CRR and CRR II) save to the extent that such law or regulation re-enacts a Basel II Regulation and excluding any such law or regulation which implements Reformed Basel III.

 

Borrower means the corporation described as such in Schedule 1 (The original parties).

 

Borrower Affiliate means the Borrower, each of its Affiliates, any member of the Coustas Family or any funds controlled by the Coustas Family, any trust of which the Borrower or any of its Affiliates or any member of the Coustas Family or any funds controlled by the Coustas Family is a trustee, any partnership of which the Borrower or any of its Affiliates or any member of the Coustas Family or any funds controlled by the Coustas Family is a partner and any trust, fund or other entity which is managed by, or is under the control of, or is accustomed to follow the directions of or guidance from the Borrower or any of its Affiliates or any member of the Coustas Family or any funds controlled by the Coustas Family.

 

Break Costs means any amount specified as such in the Reference Rate Terms.

 

Builder means, in relation to a Ship, the person specified as such in Schedule 2 (Ship Information).

 

Building Contract means, in relation to a Ship, the shipbuilding contract specified in Schedule 2 (Ship Information) between the relevant Builder and the relevant Owner relating to the construction of such Ship.

 

Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in London, Athens, Piraeus, Paris, Frankfurt am Main and New York and, in relation to:

 

(a)any date for payment or purchase of an amount relating to the Loan or any part of it or any Unpaid Sum; or

 

(b)the determination of the first day or the last day of an Interest Period for the Loan (or any relevant part of it) or any Unpaid Sum, or otherwise in relation to the determination of the length of such an Interest Period; or

 

(c)the determination of a Utilisation Date,

 

which is an Additional Business Day relating to the Loan (or any relevant part of it) or the relevant Unpaid Sum.

 

Central Bank Rate has the meaning given to that term in the Reference Rate Terms.

 

Central Bank Rate Adjustment has the meaning given to that term in the Reference Rate Terms.

 

Central Bank Rate Spread has the meaning given to that term in the Reference Rate Terms.

 

4

 

 

Change of Control occurs if at any time:

 

(a)the Coustas Family (and/or any funds controlled by the Coustas Family) ceases to ultimately beneficially own at least 15 per cent and one share of the issued voting share capital of the Borrower; or

 

(b)the Coustas Family ceases to have the power to cast at a general meeting of the Borrower at least 15 per cent and one share of the maximum number of votes of the issued voting share capital that might be cast at a general meeting of the Borrower; or

 

(c)Dr John Coustas ceases to be both the Chief Executive Officer of the Borrower and a director of the Borrower unless this is due to his death or disability and, in such case, a replacement person is appointed by the Borrower's board of directors; or

 

(d)any group of (i) the existing members of the board of directors of the Borrower as at the date of this Agreement and (ii) any directors appointed following nomination by the existing board of directors, does not comprise a majority of the board of directors of the Borrower; or

 

(e)any one or more persons (who are not members of the Coustas Family) acting in concert controls the Borrower; or

 

(f)Dr John Coustas and/or Danaos Investment Limited cease to own 80% of the capital stock and/or voting rights in the Manager and/or cease to control the Manager; or

 

(g)any Guarantor ceases to be a wholly-owned direct Subsidiary of, and/or to be controlled by, the Borrower.

 

Charged Property means all of the assets of the Obligors which from time to time are, or are expressed or intended to be, the subject of the Transaction Security.

 

Charter means, in relation to a Ship, the charter commitment for that Ship details of which are provided under such Ship in Schedule 2 (Ship Information) and Charters means any or all of them.

 

Charter Assignment means, in relation to a Ship and its Charter Documents for an Assignable Charter, a first ranking assignment by the relevant Owner of its interest in such Charter Documents in favour of the Security Agent in the agreed form.

 

Charter Documents means, in relation to an Assignable Charter of a Ship, that Assignable Charter, any documents supplementing it and any guarantee (including any relevant Charter Guarantee) or other security given by any person for the relevant Charterer's obligations under it.

 

Charter Guarantee means, in relation to an Assignable Charter of a Ship, any guarantee in relation to that Assignable Charter and any other guarantee or surety issued by the relevant Charter Guarantor or any other person in favour of the relevant Owner in accordance with the relevant Assignable Charter.

 

Charter Guarantor means, in relation to an Assignable Charter of a Ship, any charter guarantor of the Charterer of that Ship.

 

Charterer means, in relation to an Assignable Charter of a Ship, the charterer (or other counterparty of the Owner thereunder) of that Ship (which includes, in the case of a Charter, the charterer or other counterparty named in Schedule 2 (Ship Information) as "Charterer" of that Ship under that Charter).

 

Classification means, in relation to a Ship, the classification specified in respect of such Ship in Schedule 2 (Ship Information) with the relevant Classification Society, the equivalent classification with another Classification Society or another classification approved by the Majority Lenders as its classification, at the request of the relevant Owner.

 

Classification Society means, in relation to a Ship, the classification society specified in respect of such Ship in Schedule 2 (Ship Information) or another classification society (being a member of the International Association of Classification Societies (IACS) or, if such association no longer exists, any similar association nominated by the Agent) approved by the Majority Lenders as its Classification Society, at the request of the relevant Owner.

 

Code means the US Internal Revenue Code of 1986.

 

5

 

 

Commitment means:

 

(a)in relation to an Original Lender, the amount set opposite its name under the heading "Commitment" in Schedule 1 (The original parties) and the amount of any other Commitment assigned to it under this Agreement; and

 

(b)in relation to any other Lender, the amount of any Commitment assigned to it under this Agreement,

 

to the extent not cancelled, reduced or assigned by it under this Agreement.

 

Compliance Certificate means a certificate substantially in the form set out in Schedule 7 (Form of Compliance Certificate) or otherwise approved.

 

Compounding Methodology Supplement means, in relation to the Daily Non-Cumulative Compounded RFR Rate or the Cumulative Compounded RFR Rate, a document which:

 

(a)is agreed in writing by the Borrower, the Agent (in its own capacity) and the Agent (acting on the instructions of the Lenders);

 

(b)specifies a calculation methodology for that rate; and

 

(c)has been made available to the Borrower and each Finance Party.

 

Confidential Information means all information relating to an Obligor, the Group, the Transaction Documents or the Facility of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Facility from either:

 

(a)any Group Member or any of its advisers; or

 

(b)another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any Group Member or any of its advisers,

 

in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:

 

(i)is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of clause 46 (Confidential Information); or

 

(ii)is identified in writing at the time of delivery as non-confidential by any Group Member or any of its advisers; or

 

(iii)is known by that Finance Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.

 

Contract Price means, in relation to a Ship, the purchase price of the Ship paid by its Owner to the relevant Builder (as seller) under the relevant contract for the sale and purchase of such Ship, being in the amount specified in Schedule 2 (Ship Information) in respect of the relevant Ship.

 

6

 

 

Constitutional Documents means, in respect of an Obligor, such Obligor's certificate of incorporation, memorandum of association, articles of incorporation, by-laws or other constitutional documents including as referred to in any certificate relating to an Obligor delivered pursuant to Schedule 3 (Conditions precedent).

 

Coustas Family means Dr John Coustas and any Associate of Dr John Coustas.

 

CRR means either CRR-EU, or as the context may require, CRR-UK.

 

CRR-EU means regulation 575/2013 of the European Union on prudential requirements for credit institutions and investment firms and regulation 2019/876 of the European Union amending Regulation (EU) No 575/2013 and all delegated and implementing regulations supplementing that Regulation.

 

CRR-UK means CRR-EU as amended and transposed into the laws of the United Kingdom by the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020 and as amended by the Capital Requirements (Amendment) (EU Exit) Regulations 2019.

 

CRR II means either CRR II-EU or, as the context may require, CRR II-UK.

 

CRR II-EU means regulation 2019/876 amending CRR-EU as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements, and Regulation (EU) No 648/2012 and all delegated and implementing regulations supplementing that Regulation.

 

CRR II-UK means CRR II-EU as amended and transposed into the laws of the United Kingdom by the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020 and as amended by the Capital Requirements (Amendment) (EU Exit) Regulations 2019.

 

Cumulative Compounded RFR Rate means, in relation to an Interest Period for any Advance or any relevant part of it, or any Unpaid Sum, the percentage rate per annum determined by the Agent (or by any other Finance Party which agrees to determine that rate in place of the Agent) in accordance with the methodology set out in Schedule 11 (Cumulative Compounded RFR Rate) or in any relevant Compounding Methodology Supplement.

 

Daily Non-Cumulative Compounded RFR Rate means, in relation to any RFR Banking Day during an Interest Period for any Advance, or any relevant part of it, or any Unpaid Sum, the percentage rate per annum determined by the Agent (or by any other Finance Party which agrees to determine that rate in place of the Agent) in accordance with the methodology set out in Schedule 10 (Daily Non-Cumulative Compounded RFR Rate) or in any relevant Compounding Methodology Supplement.

 

Daily Rate means the rate specified as such in the Reference Rate Terms.

 

Danaos Investment Limited means Danaos Investment Limited, a limited company incorporated in New Zealand with its registered office at Bell Gully, Level 22, Vero Centre, 48 Shortland Street, Auckland, 1010, New Zealand as trustee of the 883 Trust, a trust governed by the law of Cayman Islands and registered as a foreign trust in New Zealand.

 

Debt Purchase Transaction means, in relation to a person, a transaction where such person:

 

(a)purchases by way of assignment or transfer;

 

(b)enters into any sub-participation in respect of; or

 

(c)enters into any other agreement or arrangement having an economic effect substantially similar to a sub-participation in respect of,

 

any Commitment or amount outstanding under this Agreement.

 

7

 

 

Deed of Covenant means, in relation to a Ship in respect of which the Mortgage is in account current form, a first ranking deed of covenant (including an assignment of its interest in the Ship's Insurances, Earnings and Requisition Compensation) in respect of such Ship by the relevant Owner in favour of the Security Agent in the agreed form.

 

Default means an Event of Default or any event or circumstance specified in clause 30 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

 

Defaulting Lender means any Lender (other than a Lender which is a Borrower Affiliate):

 

(a)which has failed to make its participation in the Loan or any part of it available (or has notified the Agent or the Borrower (which has notified the Agent) that it will not make its participation in the Loan or any part of it available) by any relevant Utilisation Date in accordance with clause 5.4 (Lenders' participation);

 

(b)which has otherwise rescinded or repudiated a Finance Document; or

 

(c)with respect to which an Insolvency Event has occurred and is continuing,

 

unless, in the case of paragraph (a) above:

 

(i)its failure to pay is caused by:

 

(A)administrative or technical error; or

 

(B)a Disruption Event; and

 

payment is made within three Business Days of its due date; or

 

(ii)the Lender is disputing in good faith whether it is contractually obliged to make the payment in question.

 

Delegate means any delegate, agent, attorney, additional trustee or co-trustee appointed by the Security Agent.

 

Delivered Cost means, in relation to a Ship, the aggregate of:

 

(a)the Contract Price for that Ship; and

 

(b)capitalised interest accrued on the cost of that Ship in accordance with US GAAP, and any additional orders and extras in respect of that Ship payable by the relevant Owner to the relevant Builder on or before its Delivery, each as recorded in such Owner's books and records in accordance with US GAAP as such Ship's estimated book value at the time of its Delivery,

 

being, on the date of this Agreement, approximately in the amount specified in Schedule 2 (Ship Information) in respect of the relevant Ship.

 

Delivery means, in relation to a Ship, the delivery of the Ship to, with acceptance by, the relevant Owner under the relevant Building Contract.

 

Delivery Date means, in relation to a Ship, the date on which its Delivery occurs.

 

Disposal Repayment Date means, in relation to:

 

(a)a Total Loss of a Ship, the applicable Total Loss Repayment Date; or

 

(b)a sale (including, without limitation, a sale for scrapping) of a Ship by the relevant Owner, the date upon which such sale is completed by the transfer of title to the purchaser in exchange for payment of all or part of the relevant purchase price (and upon or immediately prior to such completion).

 

8

 

 

Disruption Event means either or both of:

 

(a)a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

 

(b)the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:

 

(i)from performing its payment obligations under the Finance Documents; or

 

(ii)from communicating with other Parties in accordance with the terms of the Finance Documents,

 

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

 

Dormant Subsidiary means a Group Member which does not trade (for itself or as agent for any person) and does not own, legally or beneficially, assets (including, without limitation, indebtedness owed to it) which in aggregate have a value of $50,000 or more (or its equivalent in other currencies).

 

Earnings means, in relation to a Ship and a person, all money at any time payable to that person for or in relation to the use or operation of such Ship including freight, hire and passage moneys, money payable to that person for the provision of services by or from such Ship or under any charter commitment, requisition for hire compensation, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach and payments for termination or variation of any charter commitment.

 

Earnings Account means any Account designated as an Earnings Account under clause 28 (Bank accounts), and Earnings Accounts means any or all of them.

 

EEA Member Country means any member state of the European Union, Iceland, Liechtenstein and Norway.

 

Eligible Institution means any Lender or other bank, financial institution, trust, fund or other entity selected by the Borrower and which, in each case, is not a Borrower Affiliate or a Group Member.

 

Environmental Claims means:

 

(a)enforcement, clean-up, removal or other governmental or regulatory action or orders or proceedings or formal notices or investigations or claims instituted or made pursuant to any Environmental Laws or resulting from a Spill; or

 

(b)any claim made by any other person relating to a Spill.

 

Environmental Incident means any Spill from any vessel in circumstances where:

 

(a)any Fleet Vessel or its owner, operator or manager is reasonably expected to be liable for Environmental Claims arising from the Spill (other than Environmental Claims arising and fully satisfied before the date of this Agreement); and/or

 

(b)any Fleet Vessel is arrested or attached in connection with any such Environmental Claim.

 

Environmental Laws means all laws, regulations and conventions concerning pollution or protection of human health or the environment.

 

9

 

 

Erroneous Payment means a payment of an amount by the Agent to another Party which the Agent determines (in its sole discretion) was made in error.

 

EU Bail-In Legislation Schedule means the document described as such and published by the Loan Market Association (or any successor person) from time to time.

 

EU Ship Recycling Regulation means Regulation (EU) No 1257/2013 of the European Parliament and of the Council of 20 November 2013 on ship recycling and amending Regulation (EC) No 1013/2006 and Directive 2009/16/EC (Text with EEA relevance).

 

Event of Default means any event or circumstance specified as such in clause 30 (Events of Default).

 

Facility means the term loan facility made available by the Lenders under this Agreement as described in clause 2 (The Facility).

 

Facility Office means:

 

(a)in respect of a Lender, the office or offices notified by that Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days' written notice) as the office or offices through which it will perform its obligations under this Agreement provided that no Lender shall notify (or have) more than two such offices at any relevant time; or

 

(b)in respect of any other Finance Party, the office in the jurisdiction in which it is resident for Tax purposes.

 

Facility Period means the period from and including the date of this Agreement to and including the date on which the Total Commitments have reduced to zero and all indebtedness of the Obligors under the Finance Documents has been fully paid and discharged.

 

FATCA means:

 

(a)sections 1471 to 1474 of the Code or any associated regulations;

 

(b)any treaty, law or a regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or

 

(c)any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.

 

FATCA Application Date means:

 

(a)in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014; or

 

(b)in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within paragraph (a) above, the first date from which such payment may become subject to a deduction or withholding required by FATCA.

 

FATCA Deduction means a deduction or withholding from a payment under a Finance Document required by FATCA.

 

FATCA Exempt Party means a Party that is entitled to receive payments free from any FATCA Deduction.

 

Fee Letter means any letter or letters dated on or before the date of this Agreement between (inter alios) the Arranger or any of their Affiliates and the Borrower (or the Agent and the Borrower or the Security Agent and the Borrower) setting out any of the fees referred to in clause 12 (Fees) and Fee Letters means any or all of them.

 

10

 

 

Final Maturity Date means the Final Repayment Date which falls due last.

 

Final Repayment Date means, subject to clause 39.7 (Business Days) and in respect of each Advance, the earlier of (i) 57 Months after the First Repayment Date for that Advance and (ii) 1 September 2030.

 

Finance Documents means this Agreement, any Fee Letter, the Security Documents, each Compliance Certificate, any Reference Rate Supplement, any Compounding Methodology Supplement and any other document designated as such by the Agent and the Borrower.

 

Finance Lease has the meaning given to it in clause 21.2 (Financial definitions).

 

Finance Party means the Agent, the Security Agent, the Arranger, the Co-ordinator or a Lender.

 

Financial Indebtedness means any indebtedness for or in respect of:

 

(a)moneys borrowed and debit balances at banks or other financial institutions (including without limitation, any debit balance in respect of an Earnings Account);

 

(b)any acceptance under any acceptance credit or bill discounting facility (or dematerialised equivalent);

 

(c)any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

 

(d)the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with the Accounting Principles, be treated as a Finance Lease;

 

(e)receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis and meet any requirement for de-recognition under the Accounting Principles);

 

(f)any Treasury Transaction (and, when calculating the value of that Treasury Transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that Treasury Transaction, that amount) shall be taken into account);

 

(g)any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution;

 

(h)any amount raised by the issue of shares which are redeemable (other than at the option of the issuer) before all amounts outstanding under the Finance Documents have been discharged in full (or are otherwise classified as borrowings under the Accounting Principles);

 

(i)any amount of any liability under an advance or deferred purchase agreement if (i) one of the primary reasons behind entering into the agreement is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 180 days after the date of supply;

 

(j)any amount raised under any other transaction (including any forward sale or purchase, sale and sale back or sale and leaseback agreement) of a type not referred to in any other paragraph of this definition) having the commercial effect of a borrowing or otherwise classified as borrowings under the Accounting Principles; and

 

(k)(without double counting) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (j) above.

 

Financial Statements means, at any time, the consolidated financial statements of the Borrower (and its Subsidiaries) (whether quarterly or annual) delivered to the Agent under clause 20.3 (Financial statements).

 

11

 

 

Financial Quarter means the period commencing on the day after one Quarter Date and ending on the next Quarter Date.

 

Financial Year means the annual accounting period of each of the Borrower and the Guarantors, ending on or about the Accounting Reference Date in each year.

 

First Repayment Date means, subject to clause 39.7 (Business Days) and clause 6.2 (Scheduled repayments of Facility):

 

(a)in relation to each of Advance A, Advance B and Advance E:

 

(i)if such Ship is delivered to the relevant Owner on or prior to 30 June 2024, 1 September 2024; or

 

(ii)if such Ship is delivered to the relevant Owner after 30 June 2024 but on or prior to 30 September 2024, 1 December 2024;

 

(b)in relation to each of Advance C, Advance D and Advance F:

 

(i)if such Ship is delivered to the relevant Owner on or prior to 30 September 2024, 1 December 2024; or

 

(ii)if such Ship is delivered to the relevant Owner after 30 September 2024 but on or prior to 31 December 2024, 1 March 2025;

 

(c)in relation to Advance G:
<