FreeSeas Lays Groundwork for Fleet Expansion

Athens-based dry bulk shipping company FreeSeas Inc. has sold two bulker vessels as part of a financing deal it signed with a group of Norwegian based investors.

Under the deal, FreeSeas agreed with Norwegian investors on the financing of the acquisition of assets valued up to USD 15 million.

Upon the vessel acquisition by the investors, their ship-owning entities will enter into long-term bareboat charter agreement(s) with the company’s subsidiaries, on a profit-sharing basis with the investors.

FreeSeas said it would identify suitable acquisition candidates within a six-month period.

The investors will provide bank financing of approximately up to 50% to 60% to enable the completion of the transaction. Depending on the final leverage and acquisition price, a charter hire rate of up to USD 5,600 per day shall be payable after the commencement of the charter, the company said.

Concurrently with the transaction, FreeSeas agreed to place a mortgage on the M/V Free Maverick as security.

In addition, the M/V Free Hero and M/V Free Goddess have been sold for consideration as part of the security package. The company’s subsidiaries have entered into long-term bareboat agreements for such vessels with purchase options at a daily hire rate of USD 1,100 per vessel.

The total agreed security provided by the company amounts to USD 9 million, with a cash release of up to USD2 million in stages.

According to Ion G. Varouxakis Chairman President and Chief Executive Officer of FreeSeas, the agreements will enable the company to leverage its balance sheet for fleet expansion at an opportune time for counter-cyclical investments in the dry-bulk market.

“Being positioned as a buyer in a falling asset prices environment we believe is the best possible strategy. The demonstrated ability of the company to raise capital even in difficult environments is a testament to the dedication and determination of management and the board to succeed in its goal to turn around the company to profitability,” he added.