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March 24, 2009

FreeSeas gets loan covenant waivers

Piraeus-headquartered FreeSeas Inc. (Nasdaq:FREE) (Nasdaq:FREEW) (Nasdaq:FREEZ) ("FreeSeas" or the "Company"), which has a fleet of seven Handysize vessels and two Handymax dry bulk vessels, has obtained covenant waiver agreements from each of its bank lenders. It has also refinanced the existing credit facility for the Free Maverick, a 1998-built 23,994 dwt Handysize.

Summary of Covenant Waivers/Refinancing

Credit Suisse: $79.3 million outstanding on the reducing revolving credit facility. Credit Suisse has agreed to waive any potential breach of the market value-to-loan covenants from October 1, 2008 until March 31, 2010. A partial prepayment of the outstanding loan in the amount of $5.0 million will be made by the FreeSeas by July 31, 2009.

First Business Bank S.A. of Greece ("FBB"): $24.0 million outstanding term loan. FBB has agreed to waive any potential breach of market value-to-loan covenants from December 31, 2008 until January 1, 2010.

Hollandsche Bank - Unie N.V. ("HBU"): $49.6 million total facilities outstanding. FreeSeas has reached an agreement with HBU to refinance a balloon payment of $27.1 million due on August 1, 2009 on the loan for the Free Maverick. The balloon payment will be replaced by a new 3.5 year facility, which is payable through 13 quarterly installments of $600,000 beginning on August 1, 2009 and one installment of $19.3 million payable on November 1, 2012. HBU also agreed to waive any potential breach of its market value-to-loan ratio on all its facilities, from October 1, 2008 until July 1, 2010, and amend such ratio to 100% on July 1, 2010, 110% on July 1,2012 and 125% on December 31,2012.

Mr. Ion Varouxakis, President and CEO of FreeSeas, stated, "These modifications to our loan agreements, coupled with recent charter announcements, have provided FreeSeas with a greater level of operational and financial flexibility. We closely worked with our commercial lenders in negotiating these waivers, and the process involved extensive due diligence on their part. We feel that their willingness to work with us reflects the quality of FreeSeas' fleet and charter agreements, the outlook for our business model, and the positive changes in the dry bulk market over the past few weeks. To a lesser extent, we believe these waivers position us for growth as we see unprecedented opportunities for acquisitions at current market prices."

Yesterday FreeSeas reported that, to secure cash flow for a longer period, it had successfully negotiated to extend and modify time-charter agreements for two of its vessels, the Free Envoy and the Free Goddess.

With the signing of these extensions, FreeSeas has agreements for approximately 53% of its available days in 2009, which represents approximately $45 million in revenue.

The charter on the Free Envoy was extended until July/August 2009 and the rate was reduced to $20,000 per day until the new expiration date.

The charter on the Free Goddess was extended until January/February 2010 on the following terms:

A lump-sum amount of $500,000 has been paid by the charterer as an upfront non-refundable performance guarantee;

Charter rate of $8,000 per day to September 15, 2009, with an additional 50% profit sharing for any amounts earned by the company's charterers in excess of $10,000 per day; and

Charter rate of $10,500 per day starting September 15, 2009 (until January/February 2010), with an additional 50% profit sharing for amounts earned by the Company's charterers in excess of $12,500 per day.

FreeSeas Fleet Employment Data

Free Destiny (25,240 dwt Handysize 1982) Spot time charter trip of 2-4 months at $4,000 per day through April/June 2009

Free Envoy (26,318 dwt Handysize 1984) Balance of time-charter at $20,000 per day through July/August 2009

Free Goddess (22,051 dwt Handysize 1995) Balance of time-charter through September 2009 at $8,000 per day (+50% profit sharing above $10,000); increases to $10,500 per day on September 15, 2009 through January/February 2010 (+50% profit sharing above $12,500 per day)

Free Hero (24,318 dwt Handysize 1995) 60 day spot time charter trip through April 2009 at $4,500 per day

Free Impala (24,111 dwt Handysize 1997) 45 day spot time charter trip through March 2009 at $6,500 per day

Free Jupiter (47,777 dwt Handymax 2002) Balance of time charter at $28,000 per day through March 2010 and 24,000 per day through March 2011

Free Knight (24,111 dwt Handysize 1998) 40 day spot time charter trip through April 2009 at $7,000 per day

Free Lady (50,246 dwt Handymax 2003) Balance of time charter at $51,150 per day through May 2010

Free Maverick (23,994 dwt Handysize 1998) Balance of time charter through April 2009 at $32,000 per day


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