Boston, MA 09/17/2014 (wallstreetpr) – Transporter of dry-bulk cargoes, FreeSeas Inc (NASDAQ:FREE) disclosed that it was able to sell its vessel to unrelated third parties. The company has also struck an agreement for a long-term bareboat with the new owner of the vessel.
Charter of Vessel
The company said that its vessel, M/V Free Jupiter was sold for $12.25 million to unrelated third parties. However, this would not deter the company using the vessel for its future business operations, it statement said.
FreeSeas Inc (NASDAQ:FREE) has struck a long-term agreement for chartering the vessel for seven years. It would pay the new owner of the vessel $5,325 a day on bareboat contract terms, which was typical for this kind of transaction. As a result, it would get full permission for commercial utilization of the vessel on payment of the agreed rate to the owners.
The FreeSeas Inc (NASDAQ:FREE) has also indicated that it has deposited an amount of $3.75 million as its security for the fulfillment of its agreed charter terms. It also disclosed that contract rate of bareboat allow it provide significant upside space from its future operating earnings, particularly when the market shows signs of improvements. Its buying options would also enable the company to participate in any possible future asset appreciation. The vessel would be deployed in the spot market, where there were signs of improvement of late.
Management Speaks
FreeSeas Inc (NASDAQ:FREE) Chairman, President and Chief Executive Officer, Ion Varouxakis, said that the sale of the vessel provides significant liquidity to the company. He also said that the deal with the new owner also proved its ability to control its balance sheet at the right time without any dilution to shareholders’ value.
The Chairman disclosed that the additional liquidity would offer the company flexibility in driving its growth tactics. These actions come on the heels of its recently disclosed debt forgiveness and extinguishment that drastically slashed its bank debt to $23 million from $90 million within a gap of a few months.
