FreeSeas Inc (NASDAQ:FREE) decided to settle debt worth $37.6 million with debt forgiveness worth $15 million. FreeSeas is better known for offering quality services in transporting dry-bulk cargoes with the help of one Handymax and five Handysize vessels.
Reports claim that it paid total $22.6 million to Credit Suisse For settling $37.6 million of debt. FreeSeas used funds from the proceeds worth $25 million generated from the sale of Series C Warrants and Series D Convertible Preferred Stock.
Insights of The Matter
As soon as the payment of $22.6 million was made, Credit Suisse decided to cancel the remaining $15 million, executed Deed of Release and Reassignment, and Waiver of Debt. It also released all the general assignments of collateral, preferred mortgages and charter assignments that are related to vessels M/V Free Hero, M/V Free Jupiter and M/V Free Goddess of the company.
With this waiver, FreeSeas brought down its outstanding bank debt to $23.2 million from a whopping $59.7 million. It has been considered as the non-cash gain on debt extinguishment that helped the company in a great deal.
Management’s Call
The senior management team of the company was delighted to make this announcement and felt thankful to Credit Suisse. According to Mr. Ion Varouxakis, CEO, FreeSeas, the company has successfully paid off the debt to Credit Suisse. The debt forgiveness amount of $15 million helped it in a significant manner, and the entire management team would be thankful to Credit Suisse for this generous act.
He further added that with this payment, four of company’s six vassals had been freed from any mortgage. The balance sheet that was showing a whopping $90 million debt amount a few months ago had started reflecting $23.2 million, which’s a great foot. FreeSeas Inc (NASDAQ:FREE) would look forward to continuing its efforts in the same direction to become a debt free organization in the near future.
