FreeSeas Enters Into Shipbuilding Contracts for Two Handysize Drybulk Vessels
PIRAEUS, Greece, Sep 14, 2010 (GlobeNewswire via COMTEX) -- FreeSeas Inc. /quotes/comstock/15*!free/quotes/nls/free (FREE 1.01, +0.01, +1.00%) /quotes/comstock/15*!free.z/quotes/nls/freez (FREEZ 0.07, -0.04, -32.73%) ("FreeSeas" or the "Company"), a transporter of dry bulk cargoes through the ownership and operation of a fleet of seven Handysize vessels and two Handymax vessels, announced today that it has entered into shipbuilding contracts for the construction of two Handysize dry bulk vessels of approximately 33,600 dwt each for an aggregate purchase price of approximately $48.8 million. The vessels are scheduled for delivery in the second and third quarter of 2012.
The Company has secured, subject to customary legal documentation, commitments for pre-delivery and post-delivery debt financing up to an amount of $32.4 million from a leading international bank. The Company intends to use its balance sheet to pay the remainder of the purchase price.
Mr. Ion Varouxakis, Chairman and CEO of FreeSeas, stated, "Over the past year, FreeSeas has focused its efforts on generating cash flowand improving its financial position in preparation for an expansion of our fleet. We are excited to announce these orders, which, upon delivery of the vessels, will continue our strategic focus on renewing our fleet and expanding its carrying capacity, considerably lowering its average age, and at the same time decreasing its cash break-even. The favorable financing terms we have negotiated will allow us to achieve all those objectives without diluting our shareholders or undertaking unsustainable financial obligations. We have placed the orders with attractive payment terms at a first-class Chinese shipyard, reputed for delivering quality vessels on schedule. Using our extensive experience in the Handysize sector, we have negotiated high-specification standards vessels with highly optimized commercial characteristics. We continue steadfast in our belief in the fundamentals of the Handysize sector, including what we see to be growing demand and balanced fleet growth."
I had been saying this the past few months...Will FREE be able to finance its new ships without issuing new stock? And the answer is yes! Kudos to FREE management for getting this deal done. I'll post some updated numbers when I get the chance...
the $16 million they are paying for the downpayment for the 2 ships is roughly half of the current market cap....wonder if they used that to pay a dividend or buy back shares what it would do for the share price.