Freeseas intends to request a hearing before the Nasdaq listing qualifications panel, which has raised “concerns” over the Greek shipping company’s listing on the Nasdaq Capital Market.
On March 2, Nasdaq’s listing qualifications staff notified Freeseas its securities would be subject to delisting from the market “based upon its non-compliance with the minimum bid price requirement” – unless a hearing is called with the panel.
Freeseas’ stock is currently trading at $0.04 per share before markets open in the US today. Its share price has been below $1.00 per share since January 4 – more than the 30 consecutive business days permitted by the Nasdaq Capital Market’s minimum bid price requirements.
Usually, this would trigger a written notice from the market, giving a grace period in which to regain compliance, but Freeseas said Nasdaq has raised concerns over the listed company’s “ability to remedy the bid price deficiency in light of dilution that may occur from financing transactions”.
During the last three months, Freeseas has issued two convertible notes to MTR3S Holdings, an entity registered in the British Virgin Islands, which have the potential to issue millions of shares and further dilute its weak share price. The company performed a 1-for-50 reverse stock split in June last year, and the Nasdaq Capital Market is unlikely to allow it to perform another.
“The company intends to timely request a hearing before the panel, at which hearing it will present its plan to regain and sustain compliance with the bid price requirement and otherwise address the staff’s concerns in connection therewith,” Freeseas said in a statement.
Filing a request for a hearing with the panel will stay any delisting action in the meantime. Freeseas’ common stock will continue to trade on the Nasdaq Capital Market “pending the issuance of the panel’s decision following the hearing and the expiration of any extension granted by the panel”, the statement said.
In mid-December, Freeseas issued a $600,000 convertible note to MTR3S Holdings, which is convertible into equity of the same value (around 15m shares at Freeseas’ current share price, as an example), plus shares worth 18% interest per annum.
On March 1, another convertible note worth $500,000 was issued to MTR3S Holdings, which will issue up to 45,045,045 shares or a number of shares that will limit MTR3S Holdings’ beneficial ownership of Freeseas to a maximum of 4.99%. Shareholders with more than 5% holdings in US-listed companies must file equity disclosures with the US SEC.
As of February 25 (before the latest convertible note was issued), Freeseas had 750,000,000 authorised shares of common stock, of which 35,804,808 were issued and outstanding and 249,567,531 shares were reserved for issuance pursuant to convertible securities. Its preferred stock numbered 5,000,000 shares, of which 8,160 were issued and outstanding.
In June 2015, FreeSeas, which is focused on handysize bulkers, announced it had acquired a 51% stake in Standcorp International, a new company that will operate tankers, in partnership with Marvin Shipping. Standcorp International’s progress to date remains unclear. Enquiries from Splash have gone unanswered.
Splash has tried to contract Freeseas several times for comment has not received any response.