Danaos Bank Restructuring, Refinancing, Sale of Stock

Monday, August 09, 2010

Danaos Corporation (NYSE: DAC), aninternational owner of containerships, announced that it received written commitments from all 14 of its bank lenders agreeing to the terms of Danaos’ previously announced arrangement with its lenders to modify its existing debt obligations and provide new credit facilities. Under the agreed terms, which are subject to final documentation and other conditions, Danaos will receive $426.0 million of new debt financing from existing bank lenders as funding toward its current newbuilding orderbook. Additionally, under Danaos' existing bank debt facilities, representing approximately $3.0 billion of indebtedness, the amortization and maturities will be rescheduled, the interest rate margin will be reduced, and the financial covenants, events of default, and guarantee and security packages will be revised.

Danaos also announced that it has entered into agreements with several investors, including its largest stockholder, to sell to them 54.054 million shares of its Common Stock for an aggregate purchase price of $200.0 million in cash. The shares will be issued at $3.70 per share, which represents a 5.9% discount to the 30-day volume weighted average share price of $3.93 per share and a 6.6% discount to the 60-day volume weighted average share price of $3.96 per share.

This equity investment satisfies a key condition to the aforementioned arrangement with Danaos' lenders and, together with the new debt financing and existing loan modifications contemplated by such arrangement, will be used toward the completion of Danaos' current newbuilding program, comprised of 18 additional containerships aggregating 159,150 TEUs with scheduled deliveries up to 2012, as described in greater detail in the Company's Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 18, 2010.

The purchasers of the Common Stock include the Company's largest stockholder, a family trust of Dr. John Coustas, and members of his family which together will be investing over $100.0 million. Additional investors include a private company affiliated with George Economou, the chief executive officer of DryShips, Inc.(Nasdaq: DRYS), members of the executive management of Danaos, as well as other investors. Following completion of the transaction, Mr. Economou will own 10.6% of the pro forma outstanding Common Stock and will join the Board of Directors of the Company as an independent director.

Danaos' CEO, Dr. John Coustas, stated: "We are very pleased to announce the successful execution of the previously outlined restructuring of the Company's existing bank debt obligations and the new debt financing, as well as the signing of agreements with investors to purchase new Common Stock of Danaos for an aggregate amount of $200.0 million in cash. The support of our bank lenders, as demonstrated by their commitments to the restructuring of existing credit facilities and providing $426.0 million of new financing, as well as the Company’s largest stockholder and family, with a new cash investment exceeding $100.0 million, represents a very positive indication of our continued commitment to Danaos Corporation. I would also like to welcome Mr. George Economou to the Board of Directors of the Company and truly believe he is a great addition to Danaos’ Board, as we will benefit from his significant and successful experience in the shipping industry."

Evercore Partners acted as exclusive financial advisor to Danaos on all transactions associated with this restructuring.


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