DANAOS CORP, 6-K filed on 8/3/2021
Report of Foreign Issuer
v3.21.2
Document and Entity Information
6 Months Ended
Jun. 30, 2021
Entity Registrant Name DANAOS CORPORATION
Entity Central Index Key 0001369241
Document Type 6-K
Document Period End Date Jun. 30, 2021
Amendment Flag false
Current Fiscal Year End Date --12-31
Document Fiscal Year Focus 2021
Document Fiscal Period Focus Q2
v3.21.2
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jun. 30, 2021
Dec. 31, 2020
CURRENT ASSETS    
Cash and cash equivalents $ 294,418 $ 65,663
Accounts receivable, net 7,112 7,556
Inventories 9,799 9,619
Prepaid expenses 1,222 855
Due from related parties 21,326 20,426
Other current assets 14,609 14,329
Total current assets 348,486 118,448
NON-CURRENT ASSETS    
Fixed assets at cost, net of accumulated depreciation of $993,858 (2020: $941,960) 2,429,647 2,479,937
Deferred charges, net 13,440 17,339
Investments in affiliates 19,238 15,273
Other non-current assets 389,319 83,383
Total non-current assets 2,851,644 2,595,932
Total assets 3,200,130 2,714,380
CURRENT LIABILITIES    
Accounts payable 11,835 10,613
Accrued liabilities 19,881 10,960
Current portion of long-term debt, net 93,450 155,662
Current portion of long-term leaseback obligation, net 63,316 24,515
Accumulated accrued interest, current portion 5,854 18,036
Unearned revenue 20,754 19,476
Other current liabilities 13,734 423
Total current liabilities 228,824 239,685
LONG-TERM LIABILITIES    
Long-term debt, net 1,039,900 1,187,345
Long-term leaseback obligation, net of current portion 168,542 95,585
Accumulated accrued interest, net of current portion 27,450 136,433
Unearned revenue, net of current portion 16,187 19,574
Other long-term liabilities 6,034 181
Total long-term liabilities 1,258,113 1,439,118
Total liabilities 1,486,937 1,678,803
Commitments and Contingencies
STOCKHOLDERS' EQUITY    
Preferred stock (par value $0.01, 100,000,000 preferred shares authorized and not issued as of June 30, 2021 and December 31, 2020)
Common stock (par value $0.01, 750,000,000 common shares authorized as of June 30, 2021 and December 31, 2020. 24,938,211 and 24,788,598 shares issued as of June 30, 2021 and December 31, 2020; and 20,598,940 and 20,449,327 shares outstanding as of June 30, 2021 and December 31, 2020) 206 204
Additional paid-in capital 760,869 755,390
Accumulated other comprehensive loss (73,851) (86,669)
Retained earnings 1,025,969 366,652
Total stockholders' equity 1,713,193 1,035,577
Total liabilities and stockholders' equity $ 3,200,130 $ 2,714,380
v3.21.2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2021
Dec. 31, 2020
Accumulated depreciation $ 993,858 $ 941,960
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 100,000,000 100,000,000
Preferred stock, shares issued 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized 750,000,000 750,000,000
Common stock, shares issued 24,938,211 24,788,598
Common stock, shares outstanding 20,598,940 20,449,327
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
OPERATING REVENUES $ 146,434 $ 116,824 $ 278,552 $ 223,020
OPERATING EXPENSES        
Voyage expenses (4,966) (3,289) (9,194) (7,335)
Vessel operating expenses (32,940) (28,568) (64,018) (54,570)
Depreciation (26,099) (25,258) (51,898) (49,839)
Amortization of deferred drydocking and special survey costs (2,545) (2,941) (5,054) (5,251)
General and administrative expenses (7,130) (6,013) (18,025) (11,853)
Income From Operations 72,754 50,755 130,363 94,172
OTHER INCOME (EXPENSES):        
Interest income 9,531 1,588 11,509 3,302
Interest expense (18,204) (13,645) (33,315) (29,958)
Gain on investments 196,290   444,165  
Gain on debt extinguishment 111,616   111,616  
Other finance expenses (582) (1,038) (1,034) (1,660)
Equity income on investments 2,162 1,720 3,965 3,265
Other income, net 173 19 4,144 270
Loss on derivatives (903) (903) (1,796) (1,806)
Total Other Income/(Expenses), net 300,083 (12,259) 539,254 (26,587)
Net Income $ 372,837 $ 38,496 $ 669,617 $ 67,585
EARNINGS PER SHARE        
Basic earnings per share $ 18.32 $ 1.57 $ 32.95 $ 2.75
Diluted earnings per share $ 18.10 $ 1.55 $ 32.57 $ 2.73
Basic weighted average number of common shares (in thousands) 20,354 24,573 20,323 24,573
Diluted weighted average number of common shares (in thousands) 20,599 24,789 20,557 24,789
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Net income for the period $ 372,837 $ 38,496 $ 669,617 $ 67,585
Other comprehensive income/(loss):        
Unrealized gain/(loss) on available for sale securities 130 6,467 19,717 (1,865)
Reclassification to interest income (8,695)   (8,695)  
Amortization of deferred realized losses on cash flow hedges 903 903 1,796 1,806
Total Other Comprehensive Income/(Loss) (7,662) 7,370 12,818 (59)
Comprehensive Income $ 365,175 $ 45,866 $ 682,435 $ 67,526
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)
shares in Thousands, $ in Thousands
Common Stock
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total
Balance at Dec. 31, 2019 $ 248 $ 785,274 $ (116,934) $ 213,102 $ 881,690
Balance (in shares) at Dec. 31, 2019 24,789        
Increase (Decrease) in Stockholders' Equity          
Net Income       29,089 29,089
Stock compensation   298     298
Net movement in other comprehensive income     (7,429)   (7,429)
Balance at Mar. 31, 2020 $ 248 785,572 (124,363) 242,191 903,648
Balance (in shares) at Mar. 31, 2020 24,789        
Balance at Dec. 31, 2019 $ 248 785,274 (116,934) 213,102 881,690
Balance (in shares) at Dec. 31, 2019 24,789        
Increase (Decrease) in Stockholders' Equity          
Net Income         67,585
Net movement in other comprehensive income         (59)
Balance at Jun. 30, 2020 $ 248 785,870 (116,993) 280,687 949,812
Balance (in shares) at Jun. 30, 2020 24,789        
Balance at Mar. 31, 2020 $ 248 785,572 (124,363) 242,191 903,648
Balance (in shares) at Mar. 31, 2020 24,789        
Increase (Decrease) in Stockholders' Equity          
Net Income       38,496 38,496
Stock compensation   298     298
Net movement in other comprehensive income     7,370   7,370
Balance at Jun. 30, 2020 $ 248 785,870 (116,993) 280,687 949,812
Balance (in shares) at Jun. 30, 2020 24,789        
Balance at Dec. 31, 2020 $ 204 755,390 (86,669) 366,652 1,035,577
Balance (in shares) at Dec. 31, 2020 20,449        
Increase (Decrease) in Stockholders' Equity          
Net Income       296,780 296,780
Stock compensation $ 2 4,907     4,909
Stock compensation (in shares) 150        
Net movement in other comprehensive income     20,480   20,480
Balance at Mar. 31, 2021 $ 206 760,297 (66,189) 663,432 1,357,746
Balance (in shares) at Mar. 31, 2021 20,599        
Balance at Dec. 31, 2020 $ 204 755,390 (86,669) 366,652 1,035,577
Balance (in shares) at Dec. 31, 2020 20,449        
Increase (Decrease) in Stockholders' Equity          
Net Income         669,617
Net movement in other comprehensive income         12,818
Balance at Jun. 30, 2021 $ 206 760,869 (73,851) 1,025,969 1,713,193
Balance (in shares) at Jun. 30, 2021 20,599        
Balance at Mar. 31, 2021 $ 206 760,297 (66,189) 663,432 1,357,746
Balance (in shares) at Mar. 31, 2021 20,599        
Increase (Decrease) in Stockholders' Equity          
Net Income       372,837 372,837
Dividends       (10,300) (10,300)
Stock compensation   570     570
Issuance of common stock   2     2
Net movement in other comprehensive income     (7,662)   (7,662)
Balance at Jun. 30, 2021 $ 206 $ 760,869 $ (73,851) $ 1,025,969 $ 1,713,193
Balance (in shares) at Jun. 30, 2021 20,599        
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Cash Flows from Operating Activities    
Net income $ 669,617 $ 67,585
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation 51,898 49,839
Amortization of deferred drydocking and special survey costs 5,054 5,251
Amortization of finance costs 6,218 5,604
Exit fee accrued on debt 149 258
Debt discount amortization 2,590 2,858
PIK interest 726 1,550
Gain on investments (444,165)  
Gain on debt extinguishment (111,616)  
Payments for drydocking and special survey costs deferred (1,155) (13,380)
Amortization of deferred realized losses on interest rate swaps 1,796 1,806
Stock based compensation 5,479 596
Equity income on investments (3,965) (3,265)
(Increase)/Decrease in    
Accounts receivable 444 (5,407)
Inventories (180) (864)
Prepaid expenses (367) 105
Due from related parties (900) (1,864)
Other assets, current and non-current 3,093 1,934
Increase/(Decrease) in    
Accounts payable 1,425 5,235
Accrued liabilities 8,921 3,702
Unearned revenue, current and long-term (2,109) (4,465)
Other liabilities, current and long-term (210) (210)
Net Cash provided by Operating Activities 192,743 116,868
Cash Flows from Investing Activities    
Vessels additions and advances (1,811) (98,746)
Investments 145,877 (75)
Net Cash provided by/(used in) Investing Activities 144,066 (98,821)
Cash Flows from Financing Activities    
Proceeds from long-term debt 1,105,311 23,400
Payments of long-term debt (1,295,025) (65,176)
Proceeds from sale-leaseback of vessels 135,000 139,080
Payments of leaseback obligation (21,175) (142,065)
Dividends paid (10,298)  
Payments of accumulated accrued interest (7,358) (15,502)
Finance costs (14,509) (11,999)
Net Cash used in Financing Activities (108,054) (72,262)
Net Increase/(Decrease) in cash and cash equivalents 228,755 (54,215)
Cash and cash equivalents at beginning of period 65,663 139,170
Cash and cash equivalents at end of period $ 294,418 $ 84,955
v3.21.2
Basis of Presentation and General Information
6 Months Ended
Jun. 30, 2021
Basis of Presentation and General Information

1     Basis 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 the Company is the United States Dollar.

Danaos Corporation (“Danaos” or “Company”), 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 containerships 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 June 30, 2021, the condensed consolidated results of operations for the three and six months ended June 30, 2021 and 2020 and the condensed consolidated cash flows for the six months ended June 30, 2021 and 2020. 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, 2020. The results of operations for the three and six months ended June 30, 2021, 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, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The accompanying condensed consolidated financial statements (unaudited) represent the consolidation of the accounts of the Company and its wholly owned subsidiaries. The subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases. Inter-company transaction balances and unrealized gains on transactions between the companies are eliminated.

The Company also consolidates entities that are determined to be variable interest entities, of which the Company is the primary beneficiary, as defined in the authoritative guidance under U.S. GAAP. A variable interest entity is defined as a legal entity where either (a) equity interest holders as a group lack the characteristics of a controlling financial interest, including decision making ability and an interest in the entity’s residual risks and rewards, or (b) the equity holders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or (c) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. 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, cash flows and stockholders’ equity at and for each period since their respective incorporation dates. The consolidated companies are referred to as “Danaos,” or “the Company.”

1     Basis of Presentation and General Information (Continued)

As of June 30, 2021, Danaos included the vessel owning companies (the “Danaos Subsidiaries”) listed below. All vessels are container vessels:

Company

    

Date of Incorporation

    

Vessel Name

    

Year Built

    

TEU (1)

Megacarrier (No. 1) Corp.

September 10, 2007

Hyundai Honour

2012

13,100

Megacarrier (No. 2) Corp.

September 10, 2007

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

Charleston

2005

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

Phoebe

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

CMA CGM 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 (ex Performance)

2002

6,402

Asteria Shipping Company Limited

October 14, 2014

Dimitra C

2002

6,402

Continent Marine Inc.

March 22, 2006

Zim Monaco

2009

4,253

Medsea Marine Inc.

May 8, 2006

Dalian (ex Zim 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

Zim Sao Paolo

2008

4,253

Balticsea Marine Inc.

March 22, 2006

Zim 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 (ex ANL Tongala)

2004

4,253

Containers Lines Inc.

May 30, 2002

Derby D

2004

4,253

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

1998

2,452

Sarond Shipping Inc.

January 18, 2013

Artotina (ex Danae C)

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

Vladivostok

1997

2,200

Speedcarrier (No. 2) Corp.

June 28, 2007

Advance

1997

2,200

Speedcarrier (No. 3) Corp.

June 28, 2007

Stride

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

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

1     Basis of Presentation and General Information (Continued)

Impact of COVID-19 on the Company's Business

The spread of the COVID-19 virus, which has been declared a pandemic by the World Health Organization, in 2020 has caused substantial disruptions in the global economy and the shipping industry, as well as significant volatility in the financial markets, the severity and duration of which remains uncertain.

The impact of the COVID-19 pandemic continues to unfold and may continue to have negative effect on the Company’s business, financial performance and the results of its operations, including due to decreased demand for global seaborne container trade and containership charter rates, mainly experienced in the first half of 2020. The extent of the impact will depend largely on future developments. As a result, many of the Company’s estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, the Company’s estimates may change in future periods.

The Company has evaluated the impact of current economic situation on the recoverability of the carrying amount of its vessels. The Company did not identify any impairment triggers related to its vessels in the six months ended June 30, 2021.

v3.21.2
Significant Accounting Policies
6 Months Ended
Jun. 30, 2021
Significant Accounting Policies

2      Significant 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, 2020 filed with the Securities and Exchange Commission on March 4, 2021. During the six months ended June 30, 2021, there were no other significant changes made to the Company’s significant accounting policies.

v3.21.2
Fixed assets, net
6 Months Ended
Jun. 30, 2021
Fixed assets, net

3      Fixed assets, net

The residual value (estimated scrap value at the end of the vessels’ useful lives) of the fleet was estimated at $428.2 million as of June 30, 2021 and as of December 31, 2020. 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.

On May 12, 2020, the Company refinanced the existing leaseback obligation related to the vessels Hyundai Honour and Hyundai Respect with a new sale and leaseback arrangement amounting to $139.1 million with a four years term, at the end of which the Company will reacquire these vessels for an aggregate amount of $36.0 million or earlier, at the Company’s option, for a purchase price set forth in the agreement. This arrangement did not qualify for a sale of the vessels and the net proceeds were recognized as a financial leaseback liability. The carrying value of these vessels amount to $265.6 million as of June 30, 2021.

On April 12, 2021, the Company entered into a sale and leaseback arrangement for the vessels CMA CGM Melisande, CMA CGM Attila, CMA CGM Tancredi, CMA CGM Bianca and CMA CGM Samson amounting to gross proceeds of $135.0 million with a five year term, at the end of which the Company will reacquire these vessels for an aggregate amount of $31.0 million or earlier, at the Company's option, for a purchase price set forth in the agreement. This new arrangement did not qualify for a sale of the vessels and the net proceeds were recognized as a financial leaseback liability. The carrying value of these vessels amount to $436.5 million as of June 30, 2021.

3      Fixed assets, net (Continued)

The Company should be in compliance with the same financial covenants as required by the Citibank/Natwest $815 million senior secured facility – see Note 8 “Long-Term Debt, net”.

The scheduled aggregate leaseback instalments subsequent to June 30, 2021 are as follows (in thousands):

Instalments due by 12-months period ended:

    

June 30, 2022

$

74,716

June 30, 2023

 

68,482

June 30, 2024

 

77,793

June 30, 2025

7,209

Until April 2026

 

36,411

Total leaseback instalments

 

264,611

Less: Imputed interest

 

(27,396)

Total leaseback obligation

 

237,215

Less: Deferred finance costs, net

(5,357)

Less: Current leaseback obligation

 

(63,316)

Leaseback obligation, net of current portion

$

168,542

v3.21.2
Deferred Charges, net
6 Months Ended
Jun. 30, 2021
Deferred Charges, net

4     Deferred Charges, net

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

Drydocking and

    

Special Survey Costs

As of January 1, 2020

$

11,455

Additions

 

16,916

Amortization

 

(11,032)

As of December 31, 2020

17,339

Additions

 

1,155

Amortization

 

(5,054)

As of June 30, 2021

$

13,440

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 for 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.

v3.21.2
Investments in affiliates
6 Months Ended
Jun. 30, 2021
Investments in affiliates  
Investments in affiliates

5     Investments in affiliates

In August 2015, an affiliated company Gemini Shipholdings Corporation (“Gemini”) was formed by the Company and Virage International Ltd. (“Virage”), a company controlled by the Company’s largest shareholder. Gemini acquired a 100% interest in entities with capital leases for the Suez Canal and Genoa and that own the container vessels Catherine C and Leo C. In August 2019, an affiliated company of Gemini acquired an 8,533 TEU container vessel built in 2006 renamed to Belita. Gemini financed these acquisitions with the assumption of capital lease obligations of $35.4 million, $30.0 million of borrowings under secured loan facilities and an aggregate of $47.4 million from equity contributions from the Company and Virage, which subscribed in cash for 49% and 51%, respectively, of Gemini’s issued and outstanding share capital. As of June 30, 2021, Gemini consolidated its wholly owned subsidiaries listed below:

Year

Date of vessel

Company

    

Vessel Name

    

Built

    

TEU

    

delivery

Averto Shipping S.A.

Suez Canal

2002

5,610

July 20, 2015

Sinoi Marine Ltd.

Genoa

2002

5,544

August 2, 2015

Kingsland International Shipping Limited

Catherine C

2001

6,422

September 21, 2015

Leo Shipping and Trading S.A.

Leo C

2002

6,422

February 4, 2016

Springer Shipping Co.

Belita

2006

8,533

August 26, 2019

The Company has determined that Gemini is a variable interest entity of which the Company is not the primary beneficiary, and as such, this affiliated company is accounted for under the equity method and recorded under “Equity income/(loss) on investments” in the condensed consolidated statements of income. The Company does not guarantee the debt of Gemini and its subsidiaries and has the right to purchase all of the beneficial interest in Gemini that it does not own for fair market value at any time after December 31, 2018, to the extent permitted under its credit facilities. The net assets of Gemini total $39.3 million and $31.2 million as of June 30, 2021 and December 31, 2020, respectively. The Company’s exposure is limited to its share of the net assets of Gemini proportionate to its 49% equity interest in Gemini as of June 30, 2021. On July 1, 2021, the Company exercised its option to acquire the remaining equity interest in Gemini. See Note 15 "Subsequent Events".

A condensed summary of the financial information for equity accounted investments 49% owned by the Company shown on a 100% basis are as follows (in thousands):

As of

As of

    

June 30, 2021

    

December 31, 2020

Current assets

$

16,922

$

11,524

Non-current assets

$

70,091

$

69,149

Current liabilities

$

8,603

$

7,585

Non-current liabilities

$

39,151

$

41,920

Six months ended

Six months ended

    

June 30, 2021

    

June 30, 2020

Net operating revenues

$

17,984

$

16,441

Net income

$

8,091

$

6,664

v3.21.2
Other Non-current Assets
6 Months Ended
Jun. 30, 2021
Other Non-current Assets

6     Other Non-current Assets

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

As of

As of

    

June 30, 2021

    

December 31, 2020

Available for sale securities:

ZIM notes, net

$

43,559

HMM notes, net

$

5,961

19,328

Equity participation ZIM

367,840

75

Other assets

15,518

20,421

Total non-current assets

$

389,319

$

83,383

Equity participation in ZIM and interest bearing unsecured ZIM notes with original maturity in 2023, which consisted of $8.8 million Series 1 Notes and $41.1 million of Series 2 Notes, were obtained after the charter restructuring agreements with ZIM in July 2014. Interest bearing senior unsecured HMM notes consisted of $32.8 million Loan Notes 1 with original maturity in July 2024 and $6.2 million Loan Notes 2 maturing in December 2022, which were obtained after the charter restructuring agreements with HMM in July 2016. See Note 7 “Other Non-current Assets” to the consolidated financial statements in the Annual Report on Form 20-F for the year ended December 31, 2020 for further details.

The Company received $2.4 million of mandatory repayment of ZIM Series 1 Notes from excess cash of ZIM in March 2021 and $47.2 million of mandatory repayment of ZIM Series 1 and Series 2 Notes and accrued interest of $6.4 million in June 2021. Additionally, the Company received $19.9 million of mandatory repayment of HMM Loan Notes 1 and accrued interest of $3.0 million in May 2021.

On January 27, 2021, ZIM completed its initial public offering and listing on the New York Stock Exchange of its ordinary shares. Following this offering the Company owned 10,186,950 ordinary shares of ZIM. These shares were recorded at a book value of $75 thousands as of December 31, 2020. In June 2021, the Company sold 2,000,000 of ordinary shares of ZIM resulting in net proceeds of $76.4 million. The remaining shareholding interest of 8,186,950 ordinary shares, which are subject to a lockup agreement with the underwriters of the June 2021 stock sale until September 2021, has been fair valued at $367.8 million as of June 30, 2021, based on the closing price of ZIM ordinary shares on the NYSE on that date. For the six months ended June 30, 2021, the Company recognized $444.2 million of gain on these shares, of which $367.8 million is unrealized gain related to the ZIM ordinary shares still held on June 30, 2021 and is reflected under “Gain on investments” in the condensed consolidated statement of income.

Remaining HMM unsecured debt securities are not publicly traded, are infrequently traded over the counter by certain brokers and have no readily determinable market value or credit ratings. The unrealized loss in the prior years was primarily caused by challenging business environment faced by container shipping industry, which affected profitability and liquidity of HMM. The financial results and financial position of HMM have significantly improved in the recent months. The Company collects rentals on the Company’s vessels leased to HMM and the mandatory repayments of the notes on a regular basis, in accordance with the contractual agreements. The contractual terms of HMM debt securities do not permit HMM to settle the debt securities at a price less than the amortized cost basis on the investments. The Company currently does not expect HMM to settle the remaining debt securities at a price less than the amortized cost basis of the investments. The Company does not intend to sell HMM debt securities and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis.

6     Other Non-current Assets (Continued)

The following tables summarizes the unrealized positions for available-for-sale debt securities as of June 30, 2021 and December 31, 2020 (in thousands):

Amortized cost

Unrealized

Description of securities

    

basis

    

Fair value

    

gain/(loss)

June 30, 2021

HMM Notes 2

$

6,530

$

5,961

$

(569)

December 31, 2020

ZIM notes

$

49,871

$

43,559

$

(6,312)

HMM notes

24,607

19,328

(5,279)

Total

$

74,478

$

62,887

$

(11,591)

The unrealized gain/(loss), which were recognized in other comprehensive income/(loss), are analyzed as follows as of June 30, 2021 (in thousands):

Unrealized gain/(loss)

on available for

    

sale securities

Beginning balance as of January 1, 2021

$

(11,591)

Unrealized gain on available for sale securities

 

19,717

Reclassification to interest income

(8,695)

Ending balance as of June 30, 2021

$

(569)

Other assets mainly include non-current assets related to straight-lining of the Company’s revenue amounting to $15.5 million and $20.0 million as of June 30, 2021 and December 31, 2020, respectively.

v3.21.2
Accrued Liabilities
6 Months Ended
Jun. 30, 2021
Accrued Liabilities

7     Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

    

As of

    

As of

June 30, 2021

December 31, 2020

Accrued payroll

$

965

$

1,008

Accrued interest

13,438

 

2,137

Accrued dry-docking expenses

2,177

Accrued expenses

5,478

 

5,638

Total

$

19,881

$

10,960

Accrued expenses mainly consisted of accruals related to the operation of the Company’s fleet as of June 30, 2021 and December 31, 2020.

v3.21.2
Long-Term Debt, net
6 Months Ended
Jun. 30, 2021
Long-Term Debt, net

8     Long-Term Debt, net

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

Balance as of

Balance as of

Credit Facility

    

June 30, 2021

    

December 31, 2020

Citibank/Natwest $815 mil. Facility

$

815,000

Senior unsecured notes

300,000

Macquarie Bank $58 mil. Facility

50,800

$

56,000

SinoPac $13.3 mil. Facility

11,800

12,800

Fair value of debt adjustment

(11,714)

(14,304)

The Royal Bank of Scotland $475.5 mil. Facility

433,412

HSH Nordbank AG - Aegean Baltic Bank - Piraeus Bank $382.5 mil. Facility

 

351,759

Citibank $114 mil. Facility

63,061

Credit Suisse $171.8 mil. Facility

 

101,254

Citibank – Eurobank $37.6 mil. Facility

 

17,669

Club Facility $206.2 mil.

 

124,427

Sinosure Cexim - Citibank - ABN Amro $203.4 mil. Facility

 

20,340

Citibank $123.9 mil. Facility

 

85,280

Citibank $120 mil. Facility

 

93,742

Comprehensive Financing Plan exit fees accrued

 

22,660

Total long-term debt

$

1,165,886

$

1,368,100

Less: Deferred finance costs, net

(32,536)

(25,093)

Less: Current portion

(93,450)

(155,662)

Total long-term debt net of current portion and deferred finance cost

$

1,039,900

$

1,187,345

On April 12, 2021, the Company consummated the refinancing of the 2018 Credit Facilities. The Company utilized the proceeds from the new $815 million facility with Citibank/NatWest, the proceeds from the new $135 million sale and leaseback agreement with Oriental Fleet and the net proceeds from the $300 million Senior Notes, to refinance the existing facilities. The Citibank/Natwest $815 million senior secured credit facility with four-year term is repayable in sixteen quarterly instalments of  $20.4 million starting from July 12, 2021 together with a balloon payment of $489.0 million at maturity. The credit facility bears interest at LIBOR plus a margin of 2.50%.

The Company fully repaid Sinosure Cexim – Citibank – ABN Amro facility on March 18, 2021. The vessels CMA CGM Tancredi, CMA CGM Samson and CMA CGM Bianca previously mortgaged by this facility, together with CMA CGM Melisande and CMA CGM Attila, were refinanced through a new $135 million sale and leaseback arrangement with Oriental Fleet International Company Limited on April 12, 2021. Refer to Note 3 “Fixed Assets, net”.

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. Interest payments on the notes are payable semi-annually commencing on September 1, 2021. $9.0 million of bond issuance costs were deferred over the life of the bond and recognized through the new effective interest method.

8     Long-Term Debt, net (Continued)

Net proceeds from the senior unsecured notes amounting to $294.4 million were placed in an escrow account in February 2021 and on April 12, 2021 were used, together with the net proceeds from the $815 million credit facility and the $135 new sale and leaseback arrangement to refinance the Company’s 2018 Credit Facilities.

As of June 30, 2021, there was no remaining borrowing availability under the Company’s credit facilities. The Company was in compliance with the financial covenants contained in the credit facilities agreements as of June 30, 2021 and December 31, 2020.

As of June 30, 2021, each of the secured credit facilities is 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. As of June 30, 2021, fifty-three of the Company’s vessels, excluding the Hyundai Honour, Hyundai Respect, CMA CGM Melisande, CMA CGM Attila, CMA CGM Tancredi, CMA CGM Bianca and CMA CGM Samson having a net carrying value of $1,727.6 million, were subject to first preferred mortgages as collateral to the Company’s secured credit facilities.

The scheduled debt maturities of long-term debt subsequent to June 30, 2021 are as follows (in thousands):

Principal

Payments due by period ended

    

repayments

June 30, 2022

$

93,450

June 30, 2023

90,000

June 30, 2024

87,900

June 30, 2025

586,750

June 30, 2026

19,500

Thereafter

300,000

Total long-term debt

$

1,177,600

The Citibank/Natwest $815 million senior secured credit facility contains a requirement to maintain minimum fair market value of collateral vessels to loan value coverage of 120% and financial covenants requiring to maintain the following:

(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.

The Macquarie Bank credit facilities’ financial covenants were amended requiring to maintain the same financial covenants as the Citibank/Natwest $815 million senior secured credit facility.

Accounting for the 2021 Refinancing

The outstanding loan balances, exit fees and deferred financing fees related to the lenders (other than Citibank and Natwest (Royal Bank of Scotland)) under the Company’s 2018 Credit Facilities were fully repaid and accounted for under the extinguishment accounting.

8     Long-Term Debt, net (Continued)

The present value of the cash flows for the Citibank and Natwest (Royal Bank of Scotland) facilities were not substantially different from the present value of the remaining cash flows under the terms of the original instruments prior to the debt refinancing for each of the lenders, and, as such, the Company accounted for the debt refinancing as a modification. Legal and other fees related to the refinancing of $2.3 million were recorded in the income statement under the gain on debt extinguishment and $15.6 million of loan arrangement fees were deferred over the life of the facility and recognized through the new effective interest method. Additional fees related to Citibank and Natwest (Royal Bank of Scotland) amounting to $12.0 million at the date of the refinancing, replaced the existing accrued exit fees due under the 2018 Credit Facilities and are payable in eight quarterly instalments. An amount of $6.0 million is presented under “Other current liabilities” and $6.0 million under “Other long-term liabilities” as of June 30, 2021.

Accumulated accrued interest related to the prior HSH Nordbank AG - Aegean Baltic Bank - Piraeus Bank $382.5 mil. Facility amounting to $75.3 million as of April 12, 2021 and which was fully refinanced, will no longer require any future cash interest payments and therefore, was recognized in the income statement under the gain on debt extinguishment. Accumulated accrued interest related to the Royal Bank of Scotland $475.5 mil. Facility, which was refinanced by the Natwest part of the Citibank/Natwest facility was partially extinguished and accounted for under modification accounting resulting in a gain of $35.6 million related to the accumulated accrued interest that will not require any future cash interest payments. The remaining amount of $33.3 million as of April 12, 2021 will continue to be recognized in the income statement over the remaining life of the original loan as the future interest is paid. The 2021 Refinancing resulted in a total net gain on debt extinguishment of $111.6 million recognized in the income statement in the period ended June 30, 2021.

v3.21.2
Financial Instruments
6 Months Ended
Jun. 30, 2021
Financial Instruments

9     Financial Instruments

The principal financial assets of the Company consist of cash and cash equivalents, trade receivables, equity participation in ZIM and other assets. The principal financial liabilities of the Company consist of long-term bank loans. 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 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.

9     Financial Instruments (Continued)

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 available for sale securities is estimated based on weighted combination of (1) a yield-to-maturity analysis based on a quoted (non-binding) price from a third party broker, (2) a yield-to-maturity analysis of a similar bond(s) in an active market, (3) the available market data for yield-to-maturity for the corporate bonds, if available and (4) if applicable, redemption information announced by the issuer of the security. The fair value of the equity participation in ZIM is measured based on the closing price of ZIM ordinary shares on the NYSE. The Company is exposed to changes in fair value of available for sale securities as there is no hedging strategy.

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 $1.8 million was reclassified into earnings for the six months ended June 30, 2021 and 2020, 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 June 30, 2021 and December 31, 2020.

9     Financial Instruments (Continued)

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

As of June 30, 2021

As of December 31, 2020

    

Book Value

    

Fair Value

    

Book Value

    

Fair Value

(in thousands of $)

Cash and cash equivalents

$

294,418

$

294,418

$

65,663

$

65,663

ZIM notes

$

$

$

43,559

$

43,559

HMM notes

$

5,961

$

5,961

$

19,328

$

19,328

Equity participation ZIM

$

367,840

$

367,840

$

75

n/a*

Long-term debt, including current portion

$

1,165,886

$

1,165,886

$

1,368,100

$

1,368,100

*As of December 31, 2020, there was no readily determinable fair value.

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 June 30, 2021:

Fair Value Measurements as of June 30, 2021

    

Total

    

(Level I)

    

(Level II)

    

(Level III)

(in thousands of $)

HMM notes(1)

$

5,961

$

$

5,961

$

Equity participation ZIM

$

367,840

$

367,840

$

$

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 June 30, 2021:

Fair Value Measurements as of June 30, 2021

    

Total

    

(Level I)

    

 (Level II)

    

(Level III)

(in thousands of $)

Long-term debt, including current portion(2)

$

1,165,886

$

$

1,165,886

$

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, 2020:

Fair Value Measurements as of December 31, 2020

    

Total

    

(Level I)

    

(Level II)

    

(Level III)

(in thousands of $)

ZIM notes(1)

$

43,559

$

$

43,559

$

HMM notes(1)

$

19,328

$

$

19,328

$

9     Financial Instruments (Continued)

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, 2020:

Fair Value Measurements as of December 31, 2020

    

Total

    

(Level I)

    

(Level II)

    

(Level III)

(in thousands of $)

Long-term debt, including current portion(2)

$

1,368,100

$

$

1,368,100

$

(1)The fair value is estimated based on a weighted combination of (1) a yield-to-maturity analysis based on a quoted (non-binding) price from a third party broker, (2) a yield-to-maturity analysis of a similar bond(s) in an active market, (3) the available market data for yield-to-maturity for the corporate bonds, if available and (4) if applicable, redemption information announced by the issuer of the security.
(2)Long-term debt, including current portion is presented gross of deferred finance costs of $32.5 million and $25.1 million as of June 30, 2021 and December 31, 2020, respectively. The fair value of the Company’s debt is estimated based on currently available debt with similar contract terms, interest rate and remaining maturities, as well as taking into account its increased credit risk and does not include amounts related to the accumulated accrued interest.
v3.21.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2021
Commitments and Contingencies

10    Commitments 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. Furthermore, the Company does not have any outstanding commitments. On January 20, 2021, the Company received $3.9 million from Hanjin Shipping as a partial payment of a common benefit claim plus interest. See the Note 3 “Fixed Assets, Net” for buyback obligations related to the sale and leaseback arrangements.

v3.21.2
Stockholders' Equity
6 Months Ended
Jun. 30, 2021
Stockholders' Equity

11    Stockholders’ Equity

On May 10, 2021, the Company declared a dividend of $0.50 per share of common stock for the first quarter of 2021, which was paid on June 9, 2021 to stockholders of record as of May 27, 2021.

In October 2020, the Company repurchased 4,339,271 shares of the Company’s common stock for an aggregate purchase price of $31.1 million in privately negotiated transactions, including 2,517,013 shares from the Royal Bank of Scotland and 1,822,258 shares from Sphinx Investment Corp.

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.

11    Stockholders’ Equity (Continued)

On September 14, 2018, the Company granted 298,774 shares of restricted stock to executive officers of the Company, out of which 149,386 restricted shares vested on December 31, 2019 and 149,388 restricted shares are scheduled to vest on December 31, 2021. On May 10, 2019, the Company granted 137,944 shares of restricted stock to certain employees of the Manager (including 35,714 shares to executive officers), out of which 4,168 shares were forfeited in 2019 and 66,888 restricted shares vested on December 31, 2019. On February 12, 2021, the Company granted 110,000 fully vested shares to executive officers and Board of Directors members and on March 16, 2021, the Company granted 40,000 shares to certain employees of the Manager, out of which 10,000 fully vested on the grant date, 10,000 restricted shares are scheduled to vest on December 31, 2021 and the remaining 20,000 restricted shares are scheduled to vest on December 31, 2022. In 2020, 714 shares were forfeited, in 2021 414 shares were forfeited and 65,760 restricted shares are scheduled to vest on December 31, 2021. These restricted shares are subject to satisfaction of the vesting terms, under the Company’s 2006 Equity Compensation Plan, as amended. 245,148 shares and 215,562 shares of restricted stock are issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.

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.

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 six months ended June 30, 2021 and June 30, 2020, none of the directors elected to receive their compensation in Company shares.

v3.21.2
Lease Arrangements
6 Months Ended
Jun. 30, 2021
Lease Arrangements

12    Lease Arrangements

Charters-out

As of June 30, 2021, the Company generated operating revenues from its 60 vessels on time charters or bareboat charter agreements, with remaining terms ranging from less than one year to April 2028. 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.

12    Lease Arrangements (Continued)

The future minimum rentals, expected to be earned on non-cancellable time charters and bareboat charters classified as operating leases consisted of the following as of June 30, 2021 (in thousands):

Remainder of 2021

    

$

303,599

2022

 

548,859

2023

 

356,293

2024

 

161,609

2025

 

75,483

2026 and thereafter

 

50,014

Total future rentals

$

1,495,857

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.

v3.21.2
Earnings per Share
6 Months Ended
Jun. 30, 2021
Earnings per Share

13    Earnings per Share

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

Three months ended

    

June 30, 2021

    

June 30, 2020

(in thousands)

Numerator:

Net income

$

372,837

$

38,496

Denominator (number of shares in thousands):

Basic weighted average common shares outstanding

 

20,354

 

24,573

Effect of dilutive securities:

 

 

Share based compensation

 

245

 

216

Diluted weighted average common shares outstanding

 

20,599

 

24,789

Six months ended

    

June 30, 2021

    

June 30, 2020

(in thousands)

Numerator:

Net income

$

669,617

$

67,585

Denominator (number of shares in thousands):

 

 

Basic weighted average common shares outstanding

20,323

24,573

Effect of dilutive securities:

Share based compensation

234

216

Diluted weighted average common shares outstanding

20,557

24,789

v3.21.2
Related Party Transactions
6 Months Ended
Jun. 30, 2021
Related Party Transactions

14    Related Party Transactions

Management fees to Danaos Shipping Company Limited (“the Manager”) amounted to $9.2 million and $8.6 million in the six months ended June 30, 2021 and 2020, respectively, and are presented under “General and administrative expenses” in the condensed consolidated statements of income. The Company has granted restricted stock to executive officers, Board of Directors members and certain employees of the Manager. Refer to Note 11 “Stockholders' Equity”.

Commissions to the Manager amounted to $3.5 million and $2.7 million in the six months ended June 30, 2021 and 2020, respectively and are presented under “Voyage expenses” in the condensed consolidated statements of income.

The balance “Due from related parties” in the condensed consolidated balance sheets totaling $21.3 million and $20.4 million as of June 30, 2021 and December 31, 2020, respectively, represents advances to the Manager on account of the vessels’ operating and other expenses. An amount of $0.3 million and $0.2 million as of June 30, 2021 and December 31, 2020, respectively, was due to executive officers and is presented under “Accounts payable” in the condensed consolidated balance sheets.

v3.21.2
Subsequent Events
6 Months Ended
Jun. 30, 2021
Subsequent Events

15    Subsequent Events

On July 1, 2021, the Company exercised its option to acquire the remaining equity interest in Gemini. The purchase price for the 51% of Gemini is $86.7 million in cash. Substantially all of the fair value of the gross assets acquired is concentrated in adjusted vessels value, the Company will therefore account for the acquisition of the five vessels of Gemini as an asset acquisition.

On July 7, 2021, the Company entered into an agreement to acquire six 5,500 TEU vessels for a gross purchase price amounting to $260.0 million. These vessels are expected to be delivered to the Company from August to October 2021.

On August 2, 2021, the Company declared a dividend of $0.50 per share of common stock payable on August 30, 2021, to holders of record on August 16, 2021.

v3.21.2
Basis of Presentation and General Information (Tables)
6 Months Ended
Jun. 30, 2021
Schedule of the vessel owning companies (the "Danaos Subsidiaries")

1     Basis of Presentation and General Information (Continued)

As of June 30, 2021, Danaos included the vessel owning companies (the “Danaos Subsidiaries”) listed below. All vessels are container vessels:

Company

    

Date of Incorporation

    

Vessel Name

    

Year Built

    

TEU (1)

Megacarrier (No. 1) Corp.

September 10, 2007

Hyundai Honour

2012

13,100

Megacarrier (No. 2) Corp.

September 10, 2007

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

Charleston

2005

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

Phoebe

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

CMA CGM 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 (ex Performance)

2002

6,402

Asteria Shipping Company Limited

October 14, 2014

Dimitra C

2002

6,402

Continent Marine Inc.

March 22, 2006

Zim Monaco

2009

4,253

Medsea Marine Inc.

May 8, 2006

Dalian (ex Zim Dalian)

2009

4,253

Blacksea Marine Inc.