Boston, MA 11/01/2013 (wallstreetpr) – Investments in FreeSeas Inc (NASDAQ:FREE) is not recommended for the faint-hearted. Doctors would advice caution even for people with strong constitutions. FreeSeas has seen many highs and deep lows, or as they say in marine parlance – “it has weathered many storms and it is still sailing”. The question is – for long?
A Brief History: FreeSeas was formed in April 2004 with one ship by the current CEO of the company, Ion G. Varouxakis. It became known as FreeSeas in 2005. It owns and operates seven ships, six Handysize vessels and one Hadymax vessels and transports coal, grain, iron ore , steel products and similar dry bulk cargos. The company relies more on spot market than long term contracts. Spot markets rates are generally higher than contractual rates but also have a down-side, the ships may remain idle for quite some time. Every time a ship docks in a harbor, with or without a load, it has to pay charges. Even idle ships have to pay these charges. Contractual rates may be low but the contracting parties pay for idle time and hence ensure that vessels do not remain idle for long.
FreeSeas has seen it all; from high jacking by Somali pirates, to near bankruptcy (several times in its history) to being nearly delisted from NASDAQ. It has seen volatility in business and share valuations (the 52 week high is $5.80; the 52 week low is $0.17 and the company has seen a historical high of $95.80 on October 19, 2007). Employee turnover is also high with only the two top executives; the CEO and the CFO remaining in their seats for a long time.
FreeSeas finally has got a breather last month. The company was able to eliminate debts of $30 million. This may lead to immediate gains of almost $12 million. The current debts levels of the company are also very high. One unnamed institutional investor has pitched in with financing of about $10 million. The current period; October to March is also very favorable for shipping lines, a good Oct-March season can wipe out all past crises. Charter rates are also on an upswing.
The company offers a very good opportunity for a large up-side. But, this micro-cap stock is definitely not for the faint-hearted.
