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."