FreeSeas Facing Delisting from Nasdaq?

FreeSeas Inc., a transporter of dry-bulk cargoes seated in Athens, Greece, said that it has been notified by NASDAQ Stock Market of its failure to meet listing requirements.

 
FreeSeas has received two letters stating that, for the previous 30 consecutive business days, the bid price of the company’s common stock closed below the minimum $1.00 per share; and that the company’s reported stockholders’ equity is below $2.5 million for the period ended March 31, 2014.

Both are requirements for continued listing on the NASDAQ Capital Market.

The letters have no immediate effect on the listing of the company’s common stock, which will continue to trade on  NASDAQ.

In accordance with NASDAQ Marketplace rules, the company has a grace period of 180 calendar days, which expires on January 12, 2015, to regain compliance with the “Minimum Bid Price Rule”, by maintaining a closing bid price of at least $1.00 per share for a minimum of ten consecutive business days during the compliance period.

If the company does not regain compliance by January 12, 2015, NASDAQ will notify the company that its common stock may be delisted.

FreeSeas has 45 calendar days to submit a plan to regain compliance with the Equity Standard Rule.

The company believes that it has already achieved compliance by virtue of the capital increase effected on May 28, 2014, following the successful closing of its $25 million public offering, which will be reflected in the unaudited interim financial statements for the six months ended June 30, 2014, which the company expects to file within the next month.

The company has been struggling with debt over the previous years, that was three times the value of its assets, reaching USD 90 million. The recent period has seen the debt considerably reduced, as the company was able to raise capital on several occasions, scaling back to a total of USD 23 million.

On May 30, 2014, FreeSeas paid $22.6 million in full settlement of $37.6 million of debt owed to Credit Suisse using funds from the $25 million proceeds of the company’s sale of the Series D Convertible Preferred Stock and Series C Warrants concluded on May 28, 2014.

Upon receipt of this payment, Credit Suisse canceled the remaining debt of $15million owed by FreeSeas and its subsidiaries and the bank executed and accordingly delivered the Waiver of Debt and Deed of Release and Reassignment, which included the release of all first preferred mortgages, general assignments of collateral and charter assignments relating to the company’s vessels M/V Free Jupiter, M/V Free Hero and M/V Free Goddess together with each vessel’s release and reassignment of insurance.

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Press Release, July 21st, 2014