FreeSeas Inc. (FREE, FREEW, FREEZ) said that it has reached an agreement for a new secured seven-year term loan of up to $27.75 million from First Business Bank S.A. of Greece.
The company said it will use the new loan to refinance its existing $21.75 million loan on the Free Impala and provides the company with up to $6.0 million of additional liquidity.
The new loan will also be secured by the Free Neptune, a Handysize vessel the company purchased in July 2009 for about $11 million.
The company intends to use the proceeds from the financing to explore potential vessel additions and for general working capital purposes.
Under the terms of the new loan, the company's expected payments would decrease by about $1.0 million in the aggregate over the next 12 months.
In addition, FBB has agreed to reduce the market-value-to-loan covenant to 100% through June 30, 2010, which then increases to 115% from July 1, 2010 through June 30, 2011 and to 125% from July 1, 2011 through maturity.
In addition, Credit Suisse has agreed to reduce the market-value-to-loan covenant on its revolving credit facility with the company to 115% from April 1, 2010 until April 1, 2011.
As a result, the company expects that the current portion of its total debt will be reduced from approximately $32 million as of June 30, 2009 to approximately $17 million as of September 30, 2009.
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