FreeSeas Inc. Announces 2008 Fourth Quarter and Year End Financial Results

Fourth Quarter 2008 Financial Highlights

• Q4 2008 operating revenues of $20.8 million, an increase of 179.5% year-over-year
• Q4 2008 net income of $5.4 million, or $0.25 earnings per share, basic and diluted
• Q4 2008 net income excluding non-cash items of $6.4 million, or $0.30 earnings per share, basic and diluted
• Q4 2008 adjusted EBITDA of $13.1 million
• Nine vessels owned and operated during the period, earning an average Time Charter Equivalent, or TCE, of $25,673 per day

2008 Year Ended Financial Highlights

• 2008 operating revenues of $66.7 million, an increase of 231% year-over-year
• 2008 net income of $19.2 million, or $0.91 earnings per share, basic and diluted
• 2008 net income excluding non-cash items of $21 million, or $1.00 earnings per share, basic and diluted
• 2008 adjusted EBITDA of $40.7 million
• An average of 7.4 vessels owned and operated during the year, earning an average TCE of $25,719 per day

2008 Operational Highlights

• Increased the size of the Company's fleet from five to nine vessels, taking delivery of the Free Impala, Free Knight, Free Lady, and Free Maverick
• Increased carrying capacity by 84% from 145,704 DWT to 68,166 DWT
• Lowered the average age of the Company's fleet from 16.4 years to 13.7

Outlook for 2009

• Charter agreements in place for 53% of available days in 2009, which represents approximately $45 million in revenue
• Company to discontinue dividend payments as it focuses on debt reduction
• Profitable operations expected based on current fleet charter deployment

PIRAEUS, Greece, March 26, 2009 (GLOBE NEWSWIRE) -- FreeSeas Inc. (Nasdaq:FREE) (Nasdaq:FREEW) (Nasdaq:FREEZ) ("FreeSeas" or the "Company"), a transporter of dry bulk cargoes through the ownership and operation of a fleet of seven Handysize vessels and two Handymax vessels, today announced financial results for its fourth quarter and year ended December 31, 2008.

Mr. Ion Varouxakis, President and CEO of FreeSeas, stated, "We are particularly pleased to report strong results for the year ended December 31, 2008, a transformational year for our Company. During 2008 we grew our fleet from five to nine vessels, lowered the average age of our fleet and secured frontloaded charters. We decided not to enter into newbuilding contracts or engage in a chartering policy of spot only coverage or long period charter at unsustainably high rates, opting instead to adopt a balanced chartering strategy.

The Company's focus in the smaller and versatile Handysize market provides for distinct competitive advantages over the larger dry bulk segments. Our vessels can transport a wider array of cargo, access a larger number of ports due to their shallow draft and onboard crane equipment, and have historically achieved greater charter rate stability. The worldwide Handysize fleet has been shrinking over the last few months, as scrapping of over-age tonnage has far outweighed newbuilding deliveries. As a result, over the last few weeks Handysize rates have outperformed those of larger vessels. We are optimistic that this trend will continue, which will in turn greatly increase the earning potential of our fleet.

Entering 2009, we have strengthened our relationships with all of our lenders, extended a number of our existing charters, and thus, solidified our near-term revenue and cash flow visibility through the second quarter of 2009 (contracting 53% of our available days, or approximately $45 million in revenue for 2009), and maintained a solid relationship with established charterers.

We believe that our current financial position is solid, as evidenced by the recent modifications to our loan agreements. In order to further strengthen the Company's balance sheet in this challenging economic environment, our management and Board of Directors has decided, in coordination with its lenders, to concentrate on reducing FreeSeas' debt. We expect to achieve debt reduction with the utilization of operating cash flow and through the suspension of dividend payments until economic and market conditions are more favorable."

To facilitate an understanding of FreeSeas, a summary of financial results is included in www.freeseas.gr

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 seven Handysize vessels and two Handymax vessels. 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 http://www.sec.gov. For more information about FreeSeas Inc., please visit the corporate website, http://www.freeseas.gr.

FreeSeas Inc. press release