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.
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.
At the Company
AlexandrosMylonas, Chief Financial Officer
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