FreeSeas Inc., a transporter of dry-bulk cargoes through the ownership announced yesterday the following agreements with its existing lenders.
FreeSeas Inc., a transporter of dry-bulk cargoes through the ownership and operation of a fleet of eight Handysize and two Handymax vessels, announced yesterday the following agreements with its existing lenders: FreeSeas has reached an agreement for a new secured seven-year term loan of up to $27.75 million from First Business Bank S.A. of Greece ("FBB"). This new loan refinances the Company's existing $21.75 million loan on the Free Impala and provides the Company with up to $6.0 million of additional liquidity. The new loan will also be secured by the Free Neptune, a Handysize vessel the Company purchased in July 2009 for approximately $11 million. The Company intends to use the proceeds from the financing to explore potential vessel additions and for general working capital purposes. Under the terms of the new loan, the Company's expected payments would decrease by approximately $1.0 million in the aggregate over the next 12 months. In addition, FBB has agreed to reduce the market-value-to-loan covenant to 100% through June 30, 2010, which then increases to 115% from July 1, 2010 through June 30, 2011 and to 125% from July 1, 2011 through maturity.
In addition, Credit Suisse has agreed to reduce the market-value-to-loan covenant on its revolving credit facility with the Company to 115% from April 1, 2010 until April 1, 2011.
As a consequence of the new secured term loan with FBB and the amended agreement with Credit Suisse, the Company expects that the current portion of its total debt will be reduced from approximately $32 million as of June 30, 2009 to approximately $17 million as of September 30, 2009.
Mr. Ion Varouxakis, President and CEO of FreeSeas, stated, "We continue to work very closely with our commercial lenders to generate additional flexibility in our finances and to provide a sustainable structure going forward. As always, we remain vigilant on the second-hand Handysize market and are now in a position to potentially capitalize on the addition of vessels to our fleet."