FreeSeas Announces Debt Purchase and Settlement Agreement with $20 Million Loan Forgiveness

FreeSeas Announces Debt Purchase and Settlement Agreement with $20 Million
Loan Forgiveness

  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 For more information about FreeSeas Inc., please  visit 
the corporate website,

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  for   more 

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


Fax: 011-30-210-429-10-10
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