FreeSeas Inc. Reports Results for the Fourth Quarter and Year-Ended December 31, 2007

Operating Revenue Increased 139% in Fourth Quarter,
72% for Full Year 2007

Company Also Announces New Charter for the Free Destiny

March 27, 2008 -- Piraeus, Greece -- FreeSeas Inc. (NASDAQ: FREE, FREEW and FREEZ) ("FreeSeas" or "the Company"), a provider of seaborne transportation for drybulk cargoes, announced today unaudited operating results for the fourth quarter and year-ended December 31, 2007.

Financial Highlights

* Operating revenues grew by 139.0% compared to the same quarter of 2006, to $7.44 million from $3.11 million, and by 71.8% for the full year 2007 over the comparable 2006 period, to $20.15 million from $11.73 million.
* Net loss, including charges related to debt extinguishment, of $2.28 million for the fourth quarter of 2007, or $0.14 per share, based on 16,022,084 basic shares outstanding, compared with a loss of $0.96 million, or $0.15 per share, based on 6,290,100 basic shares outstanding for the same quarter of 2006.
* Net income, excluding debt extinguishment charges of $2.57 million, or $0.16 per share, for the quarter ended December 31, 2007, reached $0.29 million, or $0.02 per share, based on 16,022,084 basic shares outstanding, compared to a loss of $0.96 million, or $0.15 per share, based on 6,290,100 basic shares outstanding, for the same period of 2006.

* Net income, excluding debt extinguishment charges of $2.57 million, or $0.29 per share, for the full year 2007, was $2.41 million, or $0.27 per share, based on 8,786,287 basic shares outstanding, compared with a loss of $3.32 million, or $0.53 per share, based on 6,290,100 basic shares outstanding, for the comparable period of 2006.
* Net income for the quarter ended December 31, 2007 was affected by the following factors:
    o The Free Jupiter grounding casualty and unscheduled drydocking for repairs during the fourth quarter of 2007; and
    o A $2.57 million loss on debt extinguishment, previously recorded as finance costs amortized over the life of the respective term loans, caused by the repayment and refinancing of $63 million of debt, in accordance with their respective debt terms.

* Adjusted EBITDA for the year ended December 31, 2007 increased by 223.4% as compared to same period in 2006, to $8.35 million from $2.58 million. For the fourth quarter of 2007, adjusted EBITDA increased 97% to $0.975 million from $0.495 million in the fourth quarter of 2006.

Fleet Developments

* In October 2007, the Company purchased for approximately $25.20 million the 1995-built, 22,051 dwt Handysize Free Goddess, which completed the balance of a time charter at $13,000 per day for approximately one month; upon completion of the charter, the vessel was delivered to its subsequent charterer for a two-year time charter at a rate of $19,250 per day.
* In December 2007, FreeSeas agreed to acquire two second-hand drybulk carriers from affiliated parties for a total combined purchase price of approximately $76.75 million. The Free Impala and Free Knight, both 24,111 dwt Handysize vessels, were built in 1997 and in 1998, respectively. The Free Knight was delivered to FreeSeas on March 19, 2007 and the Free Impala is expected to be delivered by the end of March. Both vessels have been fixed to one-year time charters at a rate of $31,500 per day.
* In February, the Company announced the return to service of the Free Jupiter. The vessel immediately began its previously announced three-year time charter through February 2011 at a rate of $32,000 per day for the first year, $28,000 per day for the second year and $24,000 per day for the third year.
* In March, FreeSeas announced the purchase of one second-hand drybulk carrier from an unaffiliated third party for approximately US$65.2 million. The vessel is a 2003-built, 50,246 dwt Handymax vessel built in Japan, and is scheduled for charter-free delivery to FreeSeas in June or July 2008.
* Finally, the Company also announced today a new charter for the Free Destiny, a 75-day time charter at $27,500 per day.


Corporate Initiatives

* In October 2007, the Company closed the sale of 12,650,000 shares of common stock in a public offering at $8.25 per share, which included the underwriter's over-allotment option of 1,650,000 shares, resulting in total net proceeds from the stock offering after deducting underwriting discounts and commissions, but before expenses, of approximately $97.1 million.
* During the year 2007, a total of 1,803,356 of Class B, Class W and Class Z warrants were exercised for shares of common stock, generating net cash proceeds to the Company of $8.67 million. Remaining exercisable warrants and options issued and outstanding as of December 31, 2007 amount to 3,429,144.
* In February 2008, FreeSeas declared its inaugural quarterly dividend of $0.175 per share on the common stock outstanding. The dividend was paid on February 28, 2008 to stockholders of record as of February 18, 2008.
* The Company also announced that it had finalized the financing for the Free Impala and Free Knight, securing facilities in the total amount of approximately $53 million for a term of approximately seven years.

Mr. Ion Varouxakis, President and Chief Executive Officer, commented, "We are very pleased to report the best quarter in the Company's history so far. Since our listing on NASDAQ in December of 2005, with a fleet of three vessels of an average age of 23.1 years and an equity market capitalization of $33.6 million, we have grown our proforma fleet to eight vessels, with an average age of 13.6 years, our equity market capitalization to $112 million, and increased the value of our asset base approximately ten times. With less than half of our fleet delivered and operational, we have reported the best quarter in the Company's history so far; we expect even better quarters ahead of us."

Varouxakis continued, "The retirement of the bridge loans secured in 2007 to acquire the Free Hero, the Free Goddess and Free Jupiter was a watershed event for our ever improving balance sheet. Our ability to extinguish these bridge loans and recapitalize our debt at much healthier rates will provide us increased balance sheet flexibility moving forward and ultimately save the Company very substantial amounts in interest expense."

Varouxakis concluded, "Most of the progress for our Company has been achieved in the last twelve months. For the full year, we reversed last year's operating losses and this year realized operating profits, reduced substantially our cost of capital by refinancing existing debt, writing off most of the refinancing cost in the last quarter of the year, and provided the funding for further growth through a successful capital offering in October 2007. We have also initiated payment of quarterly dividends, to which we remain deeply committed. With more leverage and financial flexibility available today than ever before, we are poised to achieve further growth."

The Company also announced today that it has filed with the US Securities and Exchange Commission a universal shelf registration statement on Form F-3 for the purpose of undertaking possible capital raises in the future. Included in this universal shelf registration statement are various securities of the Company, including common stock, preferred stock, debt securities, warrants, rights, purchase contracts and units, which the Company may determine to offer in the future, from time to time, based on market conditions and the Company's capital needs. The Company received a limited waiver from the underwriters of its October 2007 public offering from the lock-up covenant of the underwriting agreement for purposes of filing the Form F-3 and confirms that no offers or sales of "lock-up securities" (as defined in the underwriting agreement) will be made before the April 21, 2008 expiration of the lock-up period.

FreeSeas Inc. press release