FreeSeas Inc. Reports Results for the First Quarter Ended March 31, 2008

Operating Revenue Increased 102.5% in First Quarter

Company Announces Quarterly Dividend of $.175 Per Share to Shareholders of Record as of May 20, 2008

PIRAEUS, Greece, May 15, 2008 (PRIME NEWSWIRE) -- FreeSeas Inc. (Nasdaq:FREE) (Nasdaq:FREEW) (Nasdaq:FREEZ) ("FreeSeas" or "the Company"), a provider of seaborne transportation for drybulk cargoes, announced today unaudited operating results for the first quarter ended March 31, 2008.

Financial Highlights

* Operating revenues grew by 102.5% compared to the same quarter of 2007, to $8.64 million from $4.27 million.
* Net income for the first quarter of 2008, including changes in the fair value of derivatives of $.70 million, was $.28 million or $0.01 basic earnings per share based on 20,743,456 common shares outstanding, compared with net income of $0.91 million, or $0.15 basic earnings per share based on 6,290,100 common shares outstanding for the same quarter of 2007.
* Net income for the quarter ended March 31, 2008, excluding changes in the fair value of derivatives of $.70 million, reached $.99 million, or $0.05 basic earnings per share based on 20,743,456 common shares outstanding, compared to net income of $0.91 million, or $0.15 basic earnings per share, based on 6,290,100 common shares outstanding, for the same period of 2007.
* Net income for the quarter ended March 31, 2008 was affected by the following factors:
* The Free Jupiter unscheduled dry-docking for repairs during part of the first quarter of 2008, and
* A $.70 million loss related to changes in the fair value of derivatives representing unrealized valuation loss on interest rates swap contracts entered into in connection with existing bank debt.
* Adjusted EBITDA for the quarter ended March 31, 2008 increased by 78.68% as compared to same period in 2007, to $3.82 million from $2.14 million

Fleet Developments

* On February 28, 2008 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.
* The Free Knight was delivered to FreeSeas on March 19, 2008 and the Free Impala was delivered to FreeSeas on April 2, 2008. Both vessels have been fixed to one-year time charters at a rate of $31,500 per day.
* In March, FreeSeas announced the purchase of the Free Lady 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.
* Also in March, FreeSeas announced a new charter for the Free Destiny, a 75-day time charter at $27,500 per day.
* Finally, in April, the Free Envoy was chartered for a time charter of approximately 25 days at a rate of $28,500 per day.

Corporate Initiatives

* In February 2008, FreeSeas declared its inaugural quarterly dividend of $0.175 per share on its common stock outstanding. The dividend was paid on February 28, 2008 to shareholders of record as of February 18, 2008.
* Earlier this week, the Company announced that it has declared a quarterly dividend of $0.175 per share on its common stock outstanding. The dividend will be paid on May 30, 2008 to shareholders of record as of May 20, 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.
* FreeSeas launched its new corporate website in March. The website, www.freeseas.gr, will serve as FreeSeas' home on the internet, offering the investors, financial community, and industry partners an in depth look at the latest company updates as well as pertinent industry information.

Mr. Ion Varouxakis, President and Chief Executive Officer, commented, "Our first quarter results clearly indicate that we have built on the momentum established in 2007. Despite the fact that we only had the operating days equivalent of 4.2 of our seven current vessels, we were still able to post record operating revenue. We expect that the second quarter will produce even better results as we expect to increase the amount of available days, and have secured accretive charters that reflect the strength of the drybulk market."

Mr. Varouxakis continued, "While our earnings were impacted by the change in fair value of derivatives, we expect that this unrealized, non-cash loss will reverse itself in future quarters, as interest rates stabilize and their falling trend reverses during the life of the swap contracts. We will continue to hedge ourselves against fluctuations in interest rates to protect our balance sheet."

Mr. Varouxakis concluded, "We are very encouraged by the current dynamics in our industry. Rates have continued to improve and our recent acquisitions have appreciated in value. With seven vessels on the water, and one still to be delivered, we believe that our increased free cash flow will position the Company to comfortably support our operating expenses, debt service and dividend payments. As such, we announced earlier this week our second quarterly dividend of $.175 per share. Further, our increased scale and the associated revenue growth should provide ample capital for fleet growth, and we anticipate making additional acquisitions this year. Our financial flexibility continues to improve, and with it our prospects for future growth."

About FreeSeas Inc.
FreeSeas Inc. is a Marshall Islands corporation with principal offices in Piraeus, Greece. FreeSeas is engaged in the transportation of dry bulk cargoes through the ownership and operation of dry bulk carriers. Currently, it has a fleet of six Handysize vessels and one Handymax vessel. FreeSeas' common stock and warrants trade on the NASDAQ Global Market under the symbols FREE, FREEW 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 www.sec.gov. For more information about FreeSeas Inc., please go to our corporate website, www.freeseas.gr.

FreeSeas Inc. press release