Athens, Greece, July 10, 2013 (GLOBE NEWSWIRE) -- FreeSeas Announces Debt Purchase and
Settlement Agreement with $20 Million Loan Forgiveness
Athens, Greece, July 10, 2013 --
FreeSeas Inc. (Nasdaq CM: FREE) ("FreeSeas'' or the
"Company''), a transporter of dry-bulk cargoes through the
ownership and operation of a fleet of six Handysize vessels and one
Handymax vessel, announced today that it has entered into a
agreement (the "Agreement") among Deutsche Bank Nederland N.V. (
"Deutsche Bank"), the Company, various wholly-owned subsidiaries of
the Company and with a Magna Group affiliate fund, Hanover Holdings
I, LLC (the "Investor"), headquartered in New York, NY.
Pursuant to the terms of the Agreement, the
Investor has agreed to purchase USD 10,500,000 of outstanding
indebtedness owed by the Company to Deutsche Bank, out of a total
outstanding amount owed of USD 29,958,205.28, subject to the
satisfaction of a number of conditions set forth in the Agreement.
Upon payment in full of the purchase amount of $10,500,000 by the
Investor to Deutsche Bank in accordance with the terms and
conditions of the Agreement, the remaining outstanding indebtedness
of the Company and its subsidiaries to Deutsche Bank shall be
forgiven, and the mortgages of both of its two security vessels
shall be discharged.
The Agreement does not become effective until
the Investor deposits in escrow an amount of USD 2,500,000 plus all
reasonably incurred legal fees and expenses and the parties enter
into an escrow agreement.? In the event that the funds are not
deposited or the escrow agreement is not entered into within 20
trading days, the Agreement dissolves immediately.? In
addition, the Agreement will automatically terminate upon the
occurrence of certain events set forth in the Agreement.
Mr. Ion G. Varouxakis, Chairman, President and
Chief Executive Officer of the Company made the following comments:
"After a prolonged period of tortured uncertainty, we are
particularly pleased to enter into this Agreement, which will
remove approximately USD 30 million of secured debt from our books.
In conjunction with action taken since the beginning of the year,
the majority of our trade debt and a third of our bank debt will
have been exchanged for equity upon completion of this Agreement.
This development shall, we hope, accelerate our discussions with
our other Lenders for a similar realistic relief and a continued
support of our efforts. Most importantly, under the extremely
adverse circumstances we have been facing, we firmly believe this
development is optimal for our shareholders for whom we are
striving to extract maximum value; it also is the least onerous for
our lending partners." Mr. Varouxakis added: "We would like to
thank Deutsche Bank for their frank cooperation and realistic
vision, our remaining banking partners, as well as our numerous
trade and business partners who have provided us with their
invaluable support and their dedicated patience throughout this
long period."
Mr. Alexandros Mylonas, Chief Financial Officer
of the Company, added: "Since the beginning of the year we have
already swapped USD 4.8 million of trade debt into equity. This
time, the significance of this transaction on our balance sheet is
substantial. Upon completion of this Agreement, our total bank debt
is expected to be reduced from approximately USD 89.2 million on
December 31, 2012 to USD 59.7 million, two of our vessels will be
debt free, and USD 1 million in interest charges are expected to be
reduced per year. We also expect to post significant one-off gains
from the USD 19.5 million debt forgiveness. Based upon our improved
balance sheet after this transaction, we intend to seek funding for
additional working capital in order to weather the adverse
conditions still present in our industry."
Mr. Joshua Sason, Founder and Chief Executive
Officer of Magna Group, noted:? "We approach this transaction
and the work we've done with the management of FreeSeas with great
pride, and view the agreement with Deutsche Bank as a significant
milestone in the restructuring and advancement of the
company.? The expected material reduction in debt, release of
two vessels from mortgage encumbrance upon full payment of the
settlement amount and annual interest expense savings should enable
FreeSeas to be in a substantially stronger business position."
About FreeSeas Inc.
FreeSeas Inc. is a Marshall Islands corporation
with principal offices in Athens, Greece. FreeSeas is engaged in
the transportation of drybulk cargoes through the ownership and
operation of drybulk carriers. Currently, it has a fleet of
Handysize and Handymax vessels. FreeSeas' common stock trades on
the NASDAQ Capital Market under the symbol FREE. Risks and
uncertainties are described in reports filed by FreeSeas Inc. with
the U.S. Securities and Exchange Commission, which can be obtained
free of charge on the SEC's website at http://www.sec.gov. For more
information about FreeSeas Inc., please visit the corporate
website, www.freeseas.gr.
About Magna Group
Magna Group is a leading alternative investment
firm that makes innovative structured investments and provides
financial partnership to its portfolio companies; public and
private, domestic and international. With a focus on the small and
lower-middle markets, Magna Group maintains an active long
portfolio of over 40 emerging growth and development stage
companies at any given time. As a financial partner, Magna Group
prioritizes relationship and works closely with portfolio companies
to develop customized equity, debt and hybrid investment solutions.
Please visit www.magnagroupcapital.com for more information.
Forward-Looking Statements
This press release contains forward-looking
statements (as defined in Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended) concerning future events and the Company's growth
strategy and measures to implement such strategy. Words such as
''expects,'' ''intends,'' ''plans,'' ''believes,'' ''anticipates,''
''hopes,'' ''estimates,'' and variations of such words and similar
expressions are intended to identify forward-looking statements.
Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, no assurance can be
given that such expectations will prove to be correct. These
statements involve known and unknown risks and are based upon a
number of assumptions and estimates which are inherently subject to
significant uncertainties and contingencies, many of which are
beyond the control of the Company. Actual results may differ
materially from those expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ
materially include, but are not limited to, changes in the demand
for dry bulk vessels; competitive factors in the market in which
the Company operates; risks associated with operations outside the
United States; and other factors listed from time to time in the
Company's filings with the Securities and Exchange Commission. The
Company expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Company's
expectations with respect thereto or any change in events,
conditions or circumstances on which any statement is based.
Contact Information:?
FreeSeas Inc.
Alexandros Mylonas
Chief Financial Officer
011-30-210-45-28-770
Fax: 011-30-210-429-10-10
info@freeseas.gr
www.freeseas.gr
Page: 1
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