Boston, MA 06/02/2014 (wallstreetpr) – The transporter of dry-bulk cargo FreeSeas Inc (NASDAQ:FREE) can now have a deep sigh of relief. The company has managed a significant extinguishment of its bank debt following a debt forgiveness arrangement. The development not only gives the company more energy to revamp its business but also lifts a heavy financial load from its shoulders. The latest development also comes as good news for shareholders who have been patient during the company’s struggle for a turnaround.
FreeSeas on Monday, May 30, 2014, paid a total of $22.6 million to Credit Suisse and by so doing it settled in full $37.6 million in debt owed to Credit Suisse. That means that FreeSeas benefited from $15 million in debt forgiveness.
The company raised the $22.6 million paid to Credit Suisse through the offering of warrants and preferred stock through which to obtained $25 million in proceeds. The stock and warrant offering ended on May 28, 2014.
Trimming bank debt
Following the debt forgiveness deal with Credit Suisse, Freeseas Inc (NASDAQ:FREE) managed to reduce its outstanding bank debt to $23.2 million from $59.7 million. A few months ago the company had bank debt amounting to about $90 million. However, the company has managed to reduce the burden through favorable debt forgiveness. Together with the latest forgiveness of $15 million from Credit Suisse, FreeSeas has in the past few months secured a total of $35 million in debt forgiveness from various lenders.
Assets freed
Following the $22.6 million debt settlement with Credit Suisse, FreeSeas Inc (NASDAQ:FREE) set free six of its vessels. The company also managed to unlock other properties that were tied to the Credit Suisse debt. The company also expects to register a non-cash gain in its books because of the $15 million debt cancellation.
Transforming the business
According to Ion Varouxakis, the Chief Executive Officer of FreeSeas Inc (NASDAQ:FREE), the debt forgiveness earned from Credit Suisse is the latest in a series of transformative transactions that the company has already entered with partners. The company is also considering more arrangements as it seeks to shore up its balance sheet and increase fleet in anticipation for big business in its industry.
