FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2011..
Commission File Number: 000-51672
FreeSeas Inc.
(Translation of registrant's name into English)
93 Akti Miaouli
Piraeus, Greece
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [ x ] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes [ ] No [ x ]
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- .
On March 4, 2011 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
(c) Exhibit 99.1. Press release dated March 4, 2011
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| FreeSeas Inc. (Registrant) |
||
| Date: March 8, 2011 | /s/ ION G. VAROUXAKIS Ion G. Varouxakis CEO |
EXHIBIT 99.1
PIRAEUS, Greece, March 4, 2011 (GLOBE NEWSWIRE) --
Highlights
FreeSeas Inc. (Nasdaq:FREE) (Nasdaq:FREEZ) ("FreeSeas" or the "Company"), a transporter of dry-bulk cargoes through the ownership and operation of a fleet of Handysize and Handymax vessels, announced today financial results for its fourth quarter and year ended December 31, 2010. All per-share amounts have been adjusted to reflect the Company's 1-for-5 reverse stock split effective October 1, 2010.
Comments from Management
Mr. Ion Varouxakis, Chairman and CEO, stated, "We are pleased to report solid operating results for the fourth quarter of 2010 and for the year ended in December 31, 2010, which included significant deleveraging for the Company along with strong cash generation. 2010 was the beginning of our fleet renewal process with the ordering of two high-specification newbuilding Handysize vessels expected to be delivered in the second and third quarters of 2012. The financing of these vessels has already been arranged on favorable terms, subject to customary loan documentation for up to an amount of $32.4 million. As such, we expect to replace some of our older tonnage with our newbuildings, making timely sales depending on market conditions. We believe that this strategy will allow the Company to take advantage of pricing arbitrage opportunities in our sector between second-hand and newbuilding vessels, a trend that has persisted so far throughout the volatility of chartering rates. We believe that the strong demand for commodities, which is evidenced from stable or increasing prices among iron ore, coal, steel, and grain coupled with increased ton-mile demand from pockets of strong growth such as US Gulf, South America and India will improve vessels utilization and substantially increase rates. We feel that we are well positioned to take advantage of the current volatile dry bulk market."
Discussion on Recent Market Conditions
Mr. Varouxakis continued, "While the fourth quarter of the year saw weakened rates in the dry bulk sector due to an unprecedented combination of floods in Australian leading to the closure of most exporting ports there, a strong dollar caused by Eurozone weakness, temporary subdued demand from China, and the stalling of iron ore exports out of India due to local regulatory issues, we saw throughout the year overall healthy rates for Handysize and Handymax vessels. We expect to see continued volatility in rates throughout the coming year and, using our spot strategy, expect to take advantage of seasonal peaks such as, for example, the grain season in the spring which is expected to lead to increased demand for our vessels. In the last couple of years, Handysize vessels have been outperforming other asset classes during most periods of rate weakness, a trend we expect to continue."
Comments on Deleveraging and Cash Generation
Mr. Alexandros Mylonas, CFO, added, "FreeSeas generated $20.8 million of cash from operations during 2010, which was partially used to fund its growth plans and reduce the Company's debt position. We are proceeding with our deleveraging strategy and this is evidenced by our net debt, which has been reduced from $128.4 million at December 31, 2009 to $110.4 million at December 31, 2010. Additionally, we very closely monitor our cost base and vessels maintenance in order to produce above average fleet utilization and consistently low operating and general and administrative expenses. We continue to maintain low daily operating expenses on our Handysize fleet, in addition to maintaining the lowest daily general and administrative expenses in the industry. This provides FreeSeas with flexibility in our operations, which we have taken advantage of during these volatile market conditions."
Fourth Quarter 2010 Financial Review
2010 Financial Review
Balance Sheet and Debt Repayment Information
As of December 31, 2010, FreeSeas' cash and cash equivalents and restricted cash were $10.1 million and stockholders' equity was $123.2 million, compared to $9.6 million and $144.5 million, respectively, at December 31, 2009. The Company's principal repayments total $23.0 million for 2011 (including $8.8 million expected prepayment from the sale of M/V Free Hero).
The following table describes FreeSeas' annual debt repayment obligations for 2011 through 2016:
| Year | Amount | Upcoming Obligations by Quarter | ||||
| (in 000s) | (in 000s) | |||||
| 2011 | $23,022 | Q1 2011* | $3,588 | |||
| 2012** | $32,207 | Q2 2011 | $3,588 | |||
| 2013 | $12,798 | Q3 2011*** | $12,347 | |||
| 2014 | $12,798 | Q4 2011 | $3,499 | |||
| 2015 | $17,359 | $23,022 | ||||
| 2016 | $22,275 | |||||
| Total | $120,459 | |||||
| * FreeSeas has already paid $2 million in principal as of March 1, 2010. | ||||||
|
** Includes a balloon payment of $17.6 million due in November 2012, which FreeSeas currently intends to refinance, although there can be no assurances that it will be able to do so. |
||||||
| *** Includes $8.8 million expected prepayment from the sale of M/V Free Hero. | ||||||
Fleet Employment (as of March 4, 2011)
| Vessel Name | Type | Built | Dwt | Employment |
| M/V Free Lady | Handymax | 2003 | 50.246 | About 3 - 5 months time charter at $14,000 per day for the first 120 days and $15,500 for the balance period through March/May 2011 |
| M/V Free Jupiter | Handymax | 2002 | 47.777 |
About 65 day time charter trip at $6,750 per day and $13,000 for any day in excess of 80 days through April/May 2011 |
| M/V Free Knight | Handysize | 1998 | 24.111 | 80 day time charter trip at $10,000 per day through May 2011 |
| M/V Free Maverick | Handysize | 1998 | 23.994 | About 62 day time charter trip at $9,100 per day through May 2011 |
| M/V Free Impala | Handysize | 1997 | 24.111 | 20-30 day time charter trip at $10,200 per day through March 2011 |
| M/V Free Neptune | Handysize | 1996 | 30.838 |
4-6 months time charter at $14,000 per day for the first 115 days and $15,250 thereafter, through April/July 2011 |
| M/V Free Hero | Handysize | 1995 | 24.318 | 15-20 day time charter trip at $8,750 per day through March 2011 |
| M/V Free Goddess | Handysize | 1995 | 22.051 | 25 day time charter trip at $12,500 per day through April 2011 |
| M/V Free Envoy | Handysize | 1984 | 26.318 | 35-40 day time charter trip at $8,250 per day through March/April 2011 |
Conference Call with Accompanying Slide Presentation
The Company will discuss these results in a conference call later this morning at 9:00 a.m. ET.
| The dial-in numbers are: | |
| (866) 861-6730 (US) | |
| (702) 643-2970 (INTERNATIONAL) |
The conference call will also be broadcast live via the "Investor Relations" section of FreeSeas' website at www.freeseas.gr or interested parties can click on the following link: http://www.investorcalendar.com/IC/CEPage.asp?ID=163535.
The Company will also have an accompanying slide presentation available approximately 30 minutes prior to the conference call. To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. If you are unable to participate in the live call, the conference call will be archived.
About FreeSeas Inc.
FreeSeas Inc. is a Marshall Islands corporation with principal offices in Piraeus, Greece. FreeSeas is engaged in the transportation of drybulk cargoes through the ownership and operation of drybulk carriers. Currently, it has a fleet of seven Handysize vessels and two Handymax vessels. FreeSeas' common stock and warrants trade on the NASDAQ Global Market under the symbols FREE and FREEZ, respectively. 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, http://www.freeseas.gr.
The FreeSeas Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5981
Forward-Looking Statements
This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and the Company's growth strategy and measures to implement such strategy, including expected vessel acquisitions. Words such as "expects,'' "intends,'' "plans,'' "believes,'' "anticipates,'' "hopes,'' "estimates,'' and variations of such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in the demand for drybulk vessels; competitive factors in the market in which the Company operates; risks associated with operations outside the United States; and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.
| FREESEAS INC. | ||||
| PERFORMANCE INDICATORS | ||||
| (All amounts in tables in thousands of United States dollars, except for fleet data ) | ||||
| Three Months Ended | Year Ended | |||
|
December 31, 2010 |
December 31, 2009 |
December 31, 2010 |
December 31, 2009 |
|
| Adjusted EBITDA (2) | $ 4,957 | $ 5,747 | $ 26,834 | $ 30,337 |
| Fleet Data: | ||||
| Average number of vessels (3) | 9.00 | 10.00 | 9.65 | 9.35 |
| Ownership days (4) | 828 | 920 | 3,523 | 3,414 |
| Available days (5) | 826 | 908 | 3,430 | 3,373 |
| Operating days (6) | 820 | 866 | 3,329 | 3,294 |
| Fleet utilization (7) | 99.3% | 95.4% | 97.1% | 97.7% |
| Average daily results: | ||||
| Average TCE rate (8) | $ 13,141 | $ 15,320 | $ 15,742 | $ 16,105 |
| Vessel operating expenses (9) | $ 4,760 | $ 6,029 | $ 5,282 | $ 5,218 |
| Management fees (10) | $ 562 | $ 611 | $ 561 | $ 549 |
| General and administrative expenses (11) | $ 1,388 | $ 1,267 | $ 1,117 | $ 1,073 |
| Total vessel operating expenses (12) | $ 5,322 | $ 6,640 | $ 5,843 | $ 5,767 |
| (1) Adjusted net income reconciliation to net income: | ||||
| Adjusted Net Income. We consider adjusted net income to represent net earnings before stock based compensation expense, unrealized (gain)/loss on derivative instruments, vessel impairment loss, (gain) or loss on sale of vessel, write off of deferred financing fees and provision and write-offs of insurance claims and bad debts. Adjusted Net Income is a non-GAAP measure and does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by U.S. GAAP, and our calculation of Adjusted Net Income may not be comparable to that reported by other companies. Adjusted Net Income is included herein because it is an alternative measure of our performance. | ||||
| Three Months Ended | Year Ended | |||
|
December 31, 2010 |
December 31, 2009 |
December 31, 2010 |
December 31, 2009 |
|
| Net income (loss) | $ (17,006) | $ (363) | $ (21,821) | $ 6,859 |
| Stock-based compensation expense | 141 | 485 | 559 | 494 |
| Unrealized swap (gains)/losses | (228) | (144) | (129) | (560) |
| Vessel impairment loss | 17,062 | -- | 26,631 | -- |
| (Gain) on sale of vessel | -- | -- | (807) | -- |
| Write off of deferred financing fees | -- | 111 | -- | 111 |
| Provision and write-offs of insurance claims and bad debts | 40 | -- | 1,250 | -- |
| Adjusted Net Income | $ 9 | $ 89 | $ 5,683 | $ 6,904 |
| (2) Adjusted EBITDA reconciliation to net income: | ||||
| Adjusted EBITDA. We consider Adjusted EBITDA to represent net earnings before taxes, depreciation and amortization, amortization of deferred revenue, back log asset, stock based compensation expense, vessel impairment loss, (gain)/loss on derivative instruments, interest and finance cost net, (gain) or loss on sale of vessel and provision and write-offs of insurance claims and bad debts. Under the laws of the Marshall Islands, we are not subject to tax on international shipping income. However, we are subject to registration and tonnage taxes, which have been included in vessel operating expenses. Accordingly, no adjustment for taxes has been made for purposes of calculating Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure and does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by U.S. GAAP, and our calculation of Adjusted EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included herein because it is an alternative measure of our performance. | ||||
| Three Months Ended | Year Ended | |||
|
December 31, 2010 |
December 31, 2009 |
December 31, 2010 |
December 31, 2009 |
|
| Net income (loss) | $ (17,006) | $ (363) | $ (21,821) | $ 6,859 |
| Depreciation and amortization | 3,938 | 4,551 | 17,253 | 17,748 |
| Amortization of deferred revenue | (262) | (260) | (1,034) | (81) |
| Back log asset | -- | -- | -- | 907 |
| Stock-based compensation expense | 141 | 485 | 559 | 494 |
| Vessel impairment loss | 17,062 | -- | 26,631 | -- |
| (Gain)/loss on derivative instruments | (76) | 106 | 465 | 111 |
| Interest and finance cost, net | 1,120 | 1,228 | 4,338 | 4,299 |
| (Gain) on sale of vessel | -- | -- | (807) | -- |
| Provision and write-offs of insurance claims and bad debts | 40 | -- | 1,250 | -- |
| Adjusted EBITDA | $ 4,957 | $ 5,747 | $ 26,834 | $ 30,337 |
| (3) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in the period. | ||||
| (4) Ownership days are the total number of days in a period during which the vessels in our fleet have been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period. | ||||
| (5) Available days are the number of ownership days less the aggregate number of days that our vessels are off-hire due to major repairs, dry dockings or special or intermediate surveys. The shipping industry uses available days to measure the number of ownership days in a period during which vessels should be capable of generating revenues. | ||||
| (6) Operating days are the number of available days less the aggregate number of days that our vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues. | ||||
| (7) We calculate fleet utilization by dividing the number of our fleet's operating days during a period by the number of available days during the period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for any unforeseen reasons. | ||||
| (8) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing operating revenues (net of voyage expenses and commissions) by operating days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods: | ||||
| Three Months Ended | Year Ended | |||
|
December 31, 2010 |
December 31, 2009 |
December 31, 2010 |
December 31, 2009 |
|
| Operating revenues | $ 11,719 | $ 14,533 | $ 57,650 | $ 57,533 |
| Voyage expenses and commissions | (943) | (1,266) | (5,244) | (4,483) |
| Net operating revenues | 10,776 | 13,267 | 52,406 | 53,050 |
| Operating days | 820 | 866 | 3,329 | 3,294 |
| Time charter equivalent daily rate | $ 13,141 | $ 15,320 | $ 15,742 | $ 16,105 |
| (9) Average daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, is calculated by dividing vessel operating expenses by ownership days for the relevant time periods: | ||||
| Three Months Ended | Year Ended | |||
|
December 31, 2010 |
December 31, 2009 |
December 31, 2010 |
December 31, 2009 |
|
| Vessel operating expenses | $ 3,941 | $ 5,547 | $ 18,607 | $ 17,813 |
| Ownership days | 828 | 920 | 3,523 | 3,414 |
| Daily vessel operating expense | $ 4,760 | $ 6,029 | $ 5,282 | $ 5,218 |
| (10) Daily management fees are calculated by dividing total management fees paid on ships owned by ownership days for the relevant time period. | ||||
| (11) Average daily general and administrative expenses are calculated by dividing general and administrative expenses (excluding stock-based compensation expense) by ownership days for the relevant period. | ||||
| (12) Total vessel operating expenses, or TVOE, is a measurement of our total expenses associated with operating our vessels. TVOE is the sum of total vessel operating expense and total management fees. Daily TVOE is calculated by dividing TVOE by fleet ownership days for the relevant time period. | ||||
| FREESEAS INC. | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| FOR THE PERIODS ENDED DECEMBER 31, 2010 AND DECEMBER 31, 2009 | ||||
| (All amounts in tables in thousands of United States dollars, except for share and per share data) | ||||
| For three months ended | For three months ended | For year ended | For year ended | |
| 31-Dec-10 | 31-Dec-09 | 31-Dec-10 | 31-Dec-09 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |
| OPERATING REVENUES | $ 11,719 | $ 14,533 | $ 57,650 | $ 57,533 |
| OPERATING EXPENSES: | ||||
| Voyage expenses | (249) | (457) | (1,887) | (1,394) |
| Commissions | (694) | (809) | (3,357) | (3,089) |
| Vessel operating expenses | (3,941) | (5,547) | (18,607) | (17,813) |
| Depreciation expense | (3,515) | (4,010) | (15,365) | (16,006) |
| Amortization of deferred charges | (423) | (541) | (1,888) | (1,742) |
| Management and other fees to a related party | (465) | (562) | (1,978) | (1,874) |
| General and administrative expenses | (1,290) | (1,651) | (4,494) | (4,156) |
| Provision and write-offs of insurance claims and bad debts | (40) | -- | (1,250) | -- |
| Gain on sale of vessel | -- | -- | 807 | -- |
| Vessel impairment loss | (17,062) | -- | (26,631) | -- |
| Income (loss) from operations | $ (15,960) | $ 956 | $ (17,000) | $ 11,459 |
| OTHER INCOME (EXPENSE): | ||||
| Interest and finance costs | $ (1,121) | $ (1,229) | $ (4,375) | $ (4,323) |
| Gain/(loss) on derivative instruments | 76 | (106) | (465) | (111) |
| Interest income | 1 | 1 | 37 | 24 |
| Other | (2) | 15 | (18) | (190) |
| Other (expense) | $ (1,046) | $ (1,319) | $ (4,821) | $ (4,600) |
| Net income / (loss) | $ (17,006) | $ (363) | $ (21,821) | $ 6,859 |
| Basic earnings/(loss) per share | $ (2.69) | $ (0.06) | $ (3.46) | $ 1.35 |
| Diluted earnings/(loss) per share | (2.69) | (0.06) | (3.46) | 1.35 |
| Basic weighted average number of shares | 6,313,931 | 6,243,268 | 6,313,606 | 5,092,772 |
| Diluted weighted average number of shares | 6,313,931 | 6,243,268 | 6,313,606 | 5,092,772 |
| FREESEAS INC. | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| FOR THE PERIODS ENDED DECEMBER 31, 2010 AND DECEMBER 31, 2009 | ||
| (All amounts in tables in thousands of United States dollars, except for share and per share data) | ||
| December 31, 2010 | December, 31 2009 | |
| (Unaudited) | (Audited) | |
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $ 3,694 | 6,341 |
| Restricted cash | 5,255 | 1,750 |
| Trade receivables, net | 2,157 | 2,011 |
| Insurance claims | 133 | 9,240 |
| Due from related party | 1,285 | 1,410 |
| Inventories | 1,171 | 601 |
| Prepayments and other | 390 | 772 |
| Vessel held for sale | 13,606 | -- |
| Total current assets | $ 27,691 | 22,125 |
| Advances for vessels under construction | 5,665 | |
| Vessels, net | 213,691 | 270,701 |
| Deferred charges, net | 2,812 | 2,995 |
| Restricted cash | 1,125 | 1,500 |
| Total non-current assets | $ 223,293 | 275,196 |
| Total Assets | $ 250,984 | 297,321 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Account payable | $ 4,323 | 10,746 |
| Accrued liabilities | 1,227 | 1,310 |
| Unearned revenue | 430 | 416 |
| Due to related party | 98 | 18 |
| Derivative financial instruments - current portion | 583 | 566 |
| Deferred revenue-current portion | 136 | 1,032 |
| Bank loans - current portion | 23,022 | 15,400 |
| Total current liabilities | $ 29,819 | 29,488 |
| Derivative financial instruments - net of current portion | 538 | 684 |
| Deferred revenue-net of current portion | -- | 138 |
| Bank loans - net of current portion | 97,437 | 122,559 |
| Total long - term liabilities | $ 97,975 | 123,381 |
| Commitments and Contingencies | ||
| SHAREHOLDERS' EQUITY: | ||
| Common stock | 6 | 6 |
| Additional paid-in capital | 127,634 | 127,075 |
| Retained earnings | (4,450) | 17,371 |
| Total shareholders' equity | 123,190 | 144,452 |
| Total Liabilities and Shareholders' Equity | $ 250,984 | 297,321 |
CONTACT: At the Company
FreeSeas Inc.
Alexandros Mylonas, Chief Financial Officer
011-30-210-45-28-770
Fax: 011-30-210-429-10-10
info@freeseas.gr
www.freeseas.gr
Investor Relations
The Equity Group
Adam Prior, Vice President
212-836-9606
aprior@equityny.com
www.theequitygroup.com