Previously, the Company amended a settlement agreement (the “Settlement Agreement”) with Deutsche Bank Nederland N.V. (“Deutsche Bank”), and Crede became a party thereto and agreed to purchase $10.5 million of outstanding indebtedness owed by the Company to Deutsche Bank, subject to, among other things, court approval of the Exchange Agreement. As a result of the cour t approval, Crede will release today $10.5 million to Deutsche Bank Nederland N.V. (“Deutsche Bank”), presently held in escrow, and Deutsche Bank, upon receipt of the funds, will, in accordance with the Settlement Agreement, forgive the remaining outstanding indebtedness and overdue interest owed by FreeSeas of approximately $19.5 million in total as well as release all collateral associated with the loan, including the lifting of the mortgages over the M/V Free Maverick and the M/V Free Knight. The other $10 .5 million of outstanding indebtedness will be eliminated upon consummation of the transactions contemplated by the Exchange Agreement, which will occur later today.
A complete description of the Exchange Agreement and the court approval is more fully described in a 6-K Form being filed with the Securities and Exchange Commission contemporaneously herewith. The Company is reviewing the accounting treatment of the transaction and preliminary expects to recognize a gain on extinguishment of debt during the year ending December 31, 2013. The gain, which represents the difference between the fair value of the equity interest granted by the Company and the carrying amount of the debt, is estimated to be in excess of $12 million.
About FreeSeas Inc.
FreeSeas Inc. is a Marshall Islands corporation with principal offices in Athens, Greece. FreeSeas is engaged in the transportation of drybulk cargoes through the ownership and operation of drybulk carriers. Currently, it has a fleet of Handysize and Handy max vessels. FreeSeas' common stock trades on the NASDAQ Capital Market under the symbol FREE. Risks and uncertainties are described in reports filed by FreeSeas Inc. with the U.S. Securities and Exchange Commission, which can be obtained free of charge on the SEC's website at http://www.sec.gov. For more information about FreeSeas Inc., please visit the corporate website, www.freeseas.gr
FreeSeas Inc. press release