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Hellenic Shipping News interviews, Mr. Dimitri J. Andritsoyiannis, Vice President and CFO of Danaos

Danaos Corporation, the Piraeus-based and NY-listed container shipping company, is ready for big things. With an orderbook of 30 vessels and 33 more under operation, the company is growing fast. Mr. Dimitri J.Andritsoyiannis, Vice President and

Chief Financial Officer of the company points out that this growth strategy will continue at least for the near term future. Danaos has achieved very long-term charters for its new buildings, with contracts of 10-12 years, thus protecting its shareholders from any turbulence in the freight rate market. Following is the full text of the interview:

Danaos recently announced an addition to the newbuilding programme, by contracting one more sub-panamax vessel, bringing the total investment to a number of 30 vessels. Are you considering further investments in newbuildings, or even acquisitions through the second hand market?

Danaos Corporation is pursuing a well thought out growth strategy. Along these lines we have managed to increase our fleet, including our order-book, on average by 30% every year since the early 90″²s. We are considering more investments to the extent that we can arrange for similar to the existing and therefore accretive chartering and financial arrangements. We have grown through both the acquisition of second hand ships and placing impressive new building orders. I believe it would be prudent to say that the same strategy will continue to fuel our growth in the near term future.

How many vessels do you expect to take delivery by the end of the year? Are they already chartered?

By the end of 2007 we will have taken delivery of nine containerships both new and secondhand. We have already taken delivery of five vessels so far. All of them are already time ““ chartered for long periods between 10 and 12 years.

What’s the current status of the container market in terms of supply and demand?

The containership market depends on the growth of the world economy and the geographical segregation between world production and the consumer. As production has moved to Asia away from the US and Europe, which still by spending terms represent the largest consumer market, the role of the containerships has increased. Demand for vessels like these we own has steadily picked up and consequently supply of such vessels as a mere function of increased new buildings has closely followed the trend. While temporarily the markets may be imbalanced, overall the containership market has shown an incredibly resilient behavior in a way that the average growth in demand is met by the average growth in fleet.

Given the large orderbook of the world container fleet, is it safe to say that rates will face downward pressures in the coming months or even years?

It all depends on the growth rate of the market demand. Currently there is no obvious reason to point to a serious challenge ahead. Even with a lower projected 2008 growth in the US we are today facing a world that is enjoying many more pockets of growth globally. A slower US growth seems to be less important today than 10 years ago. The new markets in the Asia Pacific Rim, in the Middle East and in the Eastern European countries are still fueling and may very well substitute part of the losses in the traditional economies. The order book is impressive in the containership business because the demand is equally impressive. Most important is that most of the vessels on order have already arranged charters. In our sector one does not really expect to market a $150 million asset on the day it is delivered. If the demand slows down, pressure on rates may become more evident for the re-chartering of vessels. Danaos Corporation has very long time charters at fixed rates with many of the largest liner companies in the world. Any charter market rate fluctuation therefore should not affect our performance.

Is long term time charters a safe option for the time being, a strategy followed by the company? Is it a clear way of providing earnings visibility in aid of the investors?

Danaos Corporation has very long time charters at fixed rates with many of the largest liner companies in the world. Any charter market rate fluctuation therefore should not affect our performance. This is a clear strategy that we have consciously chosen to follow. Danaos can therefore provide a higher level of comfort regarding financial performance when it is compared to other shipping companies with a spot oriented strategy. We are interested in continuing to build a long term viable going concern and not speculate either with our capital or with the investments of our shareholders. We have increased our shareholders base and managed to attract some very sophisticated investors in the short period as a public company. This to me is a clear indication that there are some smart guys out there who like what we are doing.

Do you feel “jealous” about the boom experienced in the dry bulk market with almost record rates? Would you consider entering this segment of shipping?

I will remind you that Danaos Corporation had a small fleet of bulk carriers since 2002, with the last of the lot sold in the first half of this year. In retrospect we could have clearly kept these vessels for a little bit longer. The reason we sold them however is purely operational since these vessels had specifications which would make them hard to sell or trade in the next downtrend of the market. We are extremely happy we disposed these vessels in an orderly and efficient way since all the proceeds have been fueling our CAPEX directed to our mainstream business which is the containerships. When the market cools off in the dry bulk side we may again consider to re-enter, but any acquisitions will be measured and will not compromise our overall model of long term stability.

Is an IPO really the way to go if a shipowner is seeking to expand his business? Did it serve Danaos right at the end of the day?

The IPO is only one of many ways to pursue a growth strategy. For me, the discipline that the public markets impose on every listed company is an added plus to its capacity to manage growth. It is surely an alternative source of capital but it also serves as the measure against which you are checked every day. An aggressive growth strategy is served better through the public markets. Danaos Corporation has added many vessels on its order book since we went public. We currently have a total fleet of 63 containerships both at sea and under construction, far more than when we listed our shares. The success of any follow on offerings we may chose to do in the future will also be an important element in our final evaluation regarding listing merits.

Do you believe that the company’s stock performance reflects the current value and potential of the company, or is there still way to go?

Truly this is one of the few questions that I never respond to. I will abide by our corporate policy to make no predictions or statements about the performance of our common shares.

Will we witness Hellenic shipping companies entering Athens Stock Exchange in the near future? Is there interest from shipowners towards that direction?

The Greek financial community has been extremely unsuccessful in opening up the equity markets to shipping. I still fail to see why this has happened. Even with the new legislative framework interest is faint. This may be attributed to the low liquidity of the Athens stock exchange which does not really provide a good starting point for the more established and large shipping concerns.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

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