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01/11/2012Press Releases


Dale Ploughman, the Company’s Chairman and Chief Executive Officer, stated:

“During the first nine months of 2011 we increased our revenues as the result of the larger average size of our fleet compared to the same period of last year, which expanded from 15.4 to 20 vessels. This also enabled us to minimize the effect of the sharp fall in freight rates that prevailed in the shipping markets since the beginning of 2011.

We believe that the high quality of our fleet and our expertise in commercial management have enabled us to continue to keep our vessels employed with charterers who we believe are reputable and creditworthy while we utilize the spot market to position our vessels into areas where we believe that the chances are higher in achieving favorable period employment whenever possible. Overall, we focused on achieving a balanced exposure to spot market fluctuations arranging for a diversified portfolio of charter contracts that provide
both long term cash flow stability and upside potential.

In this context, three of the four Capesize vessels in our fleet which operate under charter arrangements with market linked rates benefited from the renewed strength in the Capesize spot rates that we have experienced during the fourth quarter of 2011. Furthermore, our increased exposure to the less volatile Handysize segment, with 11 out of 20 vessels in our fleet, counterbalanced the downward pressure on the daily charter rates earned over the first nine months of 2011. At the same time, we implemented certain cost cutting measures during the year such as the reduction of general and administrative expenses and fleet management fees in an effort to support profitability and minimize losses during a difficult market environment. We also believe that our decision to adjust the book value of our six vessels acquired in 2008 will positively affect our balance sheet and profitability going forward. We believe that the recent agreement with our lenders and major shareholders for an equity injection demonstrates their confidence and commitment to the Company.

Over 2012, we expect that the fast expansion in the supply of tonnage will continue to suppress any sustained upward pressure on spot rates. Nevertheless, demolition of older vessels is continuing to be strong as scrap metal prices remain high and freight rates are low.

The dire predictions concerning the world economy that we saw earlier in 2011have yet to materialize in the economic data. Industrial production seems to be resilient in the U.S. and Japan, while the moderate slowdown in Chinese and Korean manufacturing suggests that economic fundamentals do not seem to confirm fears of a pronounced lack of demand. It therefore seems that the situation in Europe is the main factor posing a threat to the otherwise strong demand for dry bulk shipping. This suggests that as soon as we start to see the over-supply of vessels moderating, the dry bulk market is likely to stabilize at higher

We believe that Seanergy is well positioned to cope with today’s challenging market conditions. With a high quality fleet, strong management, efficient technical and commercial operations, a balanced and diversified charter portfolio, we feel confident that we can continue to work towards our goal of making Seanergy a leading dry bulk ship owner, able to capitalize on the robust long term demand for the transportation of essential commodities.”

Christina Anagnostara, the Company’s Chief Financial Officer, stated:

“During the third quarter of 2011 the Company operated 20 wholly-owned vessels earning a daily Time Charter Equivalent (“TCE”) of $13,324 compared to $16,153 in 3Q 2010, a decrease of 18%. It is worth noting that our chartering strategy and exposure to the Handysize market have resulted in a relatively modest drop in charter rates earned by our vessels, compared to the first nine months of 2010, during which market rates stood at considerably higher levels.

Total adjusted operating costs, excluding impairment charges, for the third quarter 2011 were approximately 6% higher than in the same period last year. Total adjusted operating costs were negatively impacted by an increase in the amortization of drydocking expenses, owing to the timing of surveys. On a positive note, we saw a 29% reduction in general and administrative expenses as a result of our recent cost-cutting measures coming into effect. Going forward we expect operating costs to follow a downward trend, which should prove
particularly important amidst a weak market environment.

For the nine month period ending September 30, 2011 our operating costs were impacted by increased one-time expenses relating to the reorganization of the Far East office, the timing of dry docking surveys and higher vessel operating expenses. As far as revenue is concerned, we have achieved higher revenue in the first nine months of 2011 as we have operated a larger fleet.

Moreover, unfavorable market conditions in the shipping industry have prompted Seanergy to undertake an impairment test on our vessels’ book values and goodwill. Seanergy concluded that it was prudent to impair the book values and related goodwill of the six initial vessels acquired in 2008. As a result, Seanergy wrote down the associated book values by a total of $201.9 million during the third quarter of 2011. It should be noted that this does not represent a cash expense and it does not affect the Company’s cash flow.

In addition, Seanergy agreed in principle with our major shareholders and lending institutions for an equity injection and amendments of the Company’s borrowings, which are described in detail under the financial developments section of this press release. We believe that the amendments will lead to a sustainable capital structure for the long term.  Furthermore, they serve as an important indicator of of confidence in the company’s future prospects. ”
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