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FreeSeas Announces Assignment of the Debt Purchase and Settlement Agreement

FreeSeas Announces Assignment of the Debt Purchase and Settlement Agreement

Athens, Greece,, Sept. 26, 2013 (GLOBE NEWSWIRE) -- 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 an assignment  and 
amendment  agreement   (the  "Assignment")   with  Deutsche   Bank   Nederland 
N.V.("Deutsche Bank"), a Magna  Group affiliate fund  Hanover Holdings I,  LLC 
("Hanover"), Crede CG III,  Ltd ("Crede") a  wholly-owned subsidiary of  Crede 
Capital Group, and various wholly-owned subsidiaries of the Company.

Mr. Ion G. Varouxakis, Chairman, President and Chief Executive Officer of  the 
Company made  the  following comments:  "We  are  pleased to  enter  into  the 
Assignment, which will  remove, immediately upon  appropriate court  approval, 
approximately $30  million of  debt from  our balance  sheet. Since  our  last 
announcement on July 5, 2013, we have completed our last trade debt swap  into 
equity of  about $5.8  million and  our  equity line.  Based on  our  improved 
capital structure and debt free vessels, we  will now be able to expedite  our 
plans to  pursue  opportunities for  growth,  instead of  waiting  months  for 
Deutsche Bank to be repaid, capitalizing on the current low market values  for 
vessels and improved shipping market  conditions. We have greatly  appreciated 
Magna Group's contribution, who was instrumental in structuring and  executing 
a  series  of  transactions  including  the  Settlement  Agreement,  optimally 
positioning us in the market."

As previously  reported, on  July 5,  2013, the  Company entered  into a  Debt 
Purchase and Settlement Agreement  (the "Settlement Agreement") with  Deutsche 
Bank, Hanover and the various wholly-owned subsidiaries of the Company.

Pursuant to the terms of the Settlement Agreement, Hanover agreed to  purchase 
USD$10,500,000 of outstanding  indebtedness owed  by the  Company to  Deutsche 
Bank in  accordance  with the  terms  thereof. Upon  payment  in full  of  the 
purchase price to Deutsche Bank for such purchased indebtedness in  accordance 
with  the  terms  of  the  Settlement  Agreement,  the  remaining  outstanding 
indebtedness of  FreeSeas  and  its  subsidiaries to  Deutsche  Bank  will  be 
forgiven, and  the mortgages  granted to  Deutsche  Bank on  both of  its  two 
security vessels discharged and the Company  would own these two vessels  free 
and clear of all such liens granted to Deutsche Bank.

Pursuant to the Assignment, Hanover assigned all of its rights and obligations
under the Settlement Agreement and an escrow agreement to Crede in  accordance 
with the terms  thereof. Crede  paid Hanover $3,624,345.40  in the  aggregate, 
$2,624,345.40 of which represented the  amount deposited in escrow by  Hanover 
and fees and  other expenses  incurred by  Hanover. In  addition, the  escrow 
agreement was  amended  and pursuant  thereto  Crede deposited  an  additional 
$8,002,400 into escrow, following  which the entire  aggregate amount held  in 
escrow pursuant to the escrow agreement was $10,542,057, which represented the
entire purchase price  of the  purchased indebtedness plus  fees and  expenses 
incurred by Deutsche Bank. Such entire amount would be released from escrow to
Deutsche Bank  upon  the  receipt  of the  court  approval  described  in  the 
Settlement Agreement, and the debt forgiveness, mortgage discharge, and owning
the two vessels free  and clear of  all liens granted  to Deutsche Bank  would 
occur concurrently with such release.

In addition  to  the foregoing,  the  Company, in  partial  consideration  for 
Hanover's cancellation  of  certain  covenants, issued  to  Hanover  2,000,000 
shares of common  stock and granted  customary piggy-back registration  rights 
for such shares, together with a demand registration right commencing 120 days
after September 25, 2013.

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.

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:

At the Company

FreeSeas Inc.

AlexandrosMylonas, Chief Financial Officer

011-30-210-45-28-770

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

info@freeseas.gr

www.freeseas.gr
 
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