Danaos Corporation is “disappointed” about the demise of Hanjin Shipping, which filed for receivership this week, and to which the Greek shipowner currently has eight containerships on charter.
The owner said the eight vessels’ timecharter contracts represent approximately $560m or around 20% of its $2.8bn contracted revenue backlog as of June 30, 2016.
Research by Deutsche Bank, published in April, revealed that Danaos is the shipowner with the greatest exposure to Hanjin.
“We are disappointed that the Korean Development Bank has failed to support an important participant in the global containership business,” Dr. John Coustas, CEO of Danaos, said in a statement.
“Danaos actively supported Hanjin in its efforts to restructure its operations and we are hopeful that Hanjin will be able to achieve a restructuring of its business and emerge from court receivership as a financially stronger company. We will closely monitor the process and seek to preserve the value of our assets for the benefit of our shareholders.”
The South Korean carrier accounted for 17% of Danaos’ revenue during its fiscal year 2015, according to NYSE-listed shipowner’s year-end report.
The vessels under charter to Hanjin are the 10,100-teu post-panamax containerships Hanjin Italy, Hanjin Germany and Hanjin Greece; and the 3,400-teu panamaxes Hanjin Constantza, Hanjin Algeciras, Hanjin Buenos Aires, Hanjin Santos and Hanjin Versailles.
Danaos has five credit facilities for a combined $424.8m that are secured against vessels chartered to Hanjin and to Hyundai Merchant Marine (HMM), with whom the owner renegotiated charter rates at a 20% reduction last month. Together, Hanjin and HMM accounted for 45% of Danaos’ revenues during the fiscal year 2015.
Danaos did not respond to enquiries by Splash as to Hanjin’s bankruptcy and the lower payments from HMM would affect its ability to meet the requirements of its loan covenants.
Some $274.3m was outstanding under the five credit facilities as of December 31, 2015.
Splash will be providing continued updates on the Hanjin upheaval. To view our full archive on container shipping’s largest ever bankruptcy, click here.