The Nasdaq-listed bulker used a securities filing to shed light on a pact with Dutchess Opportunity Fund II, which is managed by Dutchess Capital Management of Boston.
The deal paves the way for the sale of more than 2.3 million shares of the company’s common stock to the counterparty over the next 36 months under an initative that calls for proceeds to be set aside for "general corporate and working capital purposes", according to the regulatory notice.
“For each share of common stock purchased under the investment agreement, the investor will pay 98% of the lowest daily volume weighted average price during the pricing period, which is the five consecutive trading days commencing on the day the company delivers a put notice to the investor,” FreeSeas wrote in Friday's filing.
“Each such put may be for an amount not to exceed the greater of $200,000 or 200% of the average daily trading volume of the company’s common stock for the three consecutive trading days prior to the notice date, multiplied by the average of the three daily closing prices immediately preceding the notice date.”
FreeSeas indicated that Dutchess and its affiliates, pursuant the terms of the deal, will not be allowed to seize a stake that exceeds 9.99% of the Athens-based shipowner’s total outstanding common stock at the time of each individual put.
Shares of FreeSeas rose 5.53% in late trading Friday before topping out at around $0.22 just minutes before the close. At that rate, the three-year fundraiser would result in a war chest worth a little over half-a-million dollars.
