FreeSeas Announces Assignment Of The Debt Purchase And Settlement Agreement

Athens, Greece,, Sept. 26, 2013 (GLOBE NEWSWIRE) -- FreeSeas Inc. ( NasdaqCM: FREE)( "FreeSeas'' or the" Company"), a transporter of dry-bulk cargoesthrough the ownership and operation of a fleet of six Handysizevessels and one Handymax vessel, announced today that it hasentered into an assignment and amendment agreement (the" Assignment") with Deutsche Bank NederlandN.V.(" Deutsche Bank"), a Magna Group affiliatefund Hanover Holdings I, LLC (" Hanover"), Crede CGIII, Ltd (" Crede") a wholly-owned subsidiary ofCrede Capital Group, and various wholly-owned subsidiaries of theCompany.

Mr. Ion G. Varouxakis, Chairman, President andChief 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 $30million of debt from our balance sheet. Since our last announcementon July 5, 2013, we have completed our last trade debt swap intoequity of about $5.8 million and our equity line. Based on ourimproved capital structure and debt free vessels, we will now beable 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 andimproved shipping market conditions. We have greatly appreciatedMagna Group's contribution, who was instrumental in structuring andexecuting a series of transactions including the SettlementAgreement, optimally positioning us in the market."

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

Pursuant to the terms of the SettlementAgreement, Hanover agreed to purchase USD$10,500,000 of outstandingindebtedness owed by the Company to Deutsche Bank in accordancewith the terms thereof. Upon payment in full of the purchase priceto Deutsche Bank for such purchased indebtedness in accordance withthe terms of the Settlement Agreement, the remaining outstandingindebtedness of FreeSeas and its subsidiaries to Deutsche Bank willbe forgiven, and the mortgages granted to Deutsche Bank on both ofits two security vessels discharged and the Company would own thesetwo vessels free and clear of all such liens granted to DeutscheBank.

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

In addition to the foregoing, the Company, inpartial consideration for Hanover's cancellation of certaincovenants, issued to Hanover 2,000,000 shares of common stock andgranted customary piggy-back registration rights for such shares,together with a demand registration right commencing 120 days afterSeptember 25, 2013.

About FreeSeas Inc.

FreeSeas Inc. is a Marshall Islands corporationwith principal offices in Athens, Greece. FreeSeas is engaged inthe transportation of drybulk cargoes through the ownership andoperation of drybulk carriers. Currently, it has a fleet ofHandysize and Handymax vessels. FreeSeas' common stock trades onthe NASDAQ Capital Market under the symbol FREE. Risks anduncertainties are described in reports filed by FreeSeas Inc. withthe U.S. Securities and Exchange Commission, which can be obtainedfree of charge on the SEC's website at http://www.sec.gov. For moreinformation about FreeSeas Inc., please visit the corporatewebsite, www.freeseas.gr.

Forward-Looking Statements

This press release contains forward-lookingstatements (as defined in Section 27A of the Securities Act of1933, as amended, and Section 21E of the Securities Exchange Act of1934, as amended) concerning future events and the Company's growthstrategy and measures to implement such strategy. Words such as''expects,'' ''intends,'' ''plans,'' ''believes,'' ''anticipates,''''hopes,'' ''estimates,'' and variations of such words and similarexpressions are intended to identify forward-looking statements.Although the Company believes that the expectations reflected insuch forward-looking statements are reasonable, no assurance can begiven that such expectations will prove to be correct. Thesestatements involve known and unknown risks and are based upon anumber of assumptions and estimates which are inherently subject tosignificant uncertainties and contingencies, many of which arebeyond the control of the Company. Actual results may differmaterially from those expressed or implied by such forward-lookingstatements. Factors that could cause actual results to differmaterially include, but are not limited to, changes in the demandfor dry bulk vessels; competitive factors in the market in whichthe Company operates; risks associated with operations outside theUnited States; and other factors listed from time to time in theCompany's filings with the Securities and Exchange Commission. TheCompany expressly disclaims any obligation or undertaking torelease publicly any updates or revisions to any forward-lookingstatements contained herein to reflect any change in the Company'sexpectations 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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