Danaos Corp has concluded a $150m sale-and-leaseback deal for two of its biggest boxships with EnTrust Global, a large investment manager in which well-known shipping financier Svein Engh is involved.
Danaos chief financial officer Evangelos Chatzis confirmed to TradeWinds the deal for the 13,100-teu Hyundai Respect and Hyundai Honour (both built 2012). The transaction was initially reported by US brokers last week.
US-listed Danaos revealed in its annual 20-F filing to the US Securities and Exchange Commission in March that it would look to refinance both vessels. This was tied to a $2.2bn debt restructuring that the company clinched in the summer of 2018.
Last year's debt deal saw Danaos reduce its debt mountain to $1.7bn from $2.2bn while extending the company's debt maturities back to the end of 2023. In exchange, lenders took a 47.5% stake in Danaos after a massive new share issuance.
The sale-and-leaseback deal for the Hyundai Respect and Hyundai Honour represents "the last outstanding item" from that restructuring, Chatzis said. Danaos will continue operating the vessels until their ongoing, long-term time charter contracts with Hyundai Merchant Marine expire in the first quarter of 2024.
The company will then be obliged to buy the pair back "at a very small price," Hatzis said.
The Hyundai Respect and Hyundai Honour are among several vessels that Danaos posted as collateral in a string of loans by lenders such as Citibank and Credit Suisse.
Net proceeds from refinancing the pair will be “applied pro rata to repay the credit facilities secured by mortgages on such vessels”.
Lower market value
Danaos was carrying the pair on its books as of the end of last year with a net value of slightly above $140m each. VesselsValue estimates they are currently worth about $80m each in the secondhand market.
Danaos said in the 20-F filing that it has a total 24 vessels whose market value was below their carrying value, but did not expect to sell or otherwise dispose of any of them, except the Hyundai Respect and Hyundai Honour.
Danaos has a total of 55 boxships in its fleet. This includes five 13,100-teu ships, which are also its biggest.
EnTrust Global claims on its website to be one of the world's largest alternative investment managers. It was created in 2016 through the combination of EnTrust and Permal, and is led by chairman and chief executive Gregg S Hymowitz, a former vice president at Goldman Sachs.
Shipping financier Engh features as a senior managing director of EnTrust Global.
He was previously the chief executive at Octavian Maritime Holdings.
He then set up a lending and leasing desk at New York bank CIT, which he left in December 2015 to join EnTrust.
Engh is also known as portfolio manager at Blue Ocean Maritime Income, a unit of EnTrust, which pulled a planned stock-market listing in London late last year.
