Paragon Shipping Cancels One of Its Two Newbuilding Contracts

Paragon Shipping Inc., a global shipping transportation company specializing in drybulk cargoes, announced yesterday that it has entered into an agreement with a Chinese shipyard to cancel one of its two 4,800 TEU containership newbuilding contracts at no cost to the Company, transfer the deposit to the remaining vessel and to reduce its contract price from the original $57.5 million to$55.0 million.

After taking into consideration the above changes, the Company will have one 4,800 TEU containership newbuilding on order with $23.0 million, or approximately 42% of the purchase price, already funded and the remainder of the contract price due upon delivery in the second quarter of 2014. The final installment due on delivery will be financed through the Company’s loan facility with China Development Bank, subject to certain closing conditions. The Company has granted Box Ships Inc. an option to acquire the containership newbuilding.

Subsequently, the Company announced that it has acquired two additional Eco-Design Ultramax newbuilding drybulk carriers from an affiliated entity with scheduled deliveries in the second quarter of 2015. The two Ultramax newbuildings are being built in Yangzhou Dayang Shipbuilding Co., a member of the Sinopacific Shipbuilding Group, and will have acarrying capacity of 63,500 dwt each. The Ultramax vessels are sister ships to the company’s existing two Ultramax newbuildingsunder construction at the same yard that are expected to be delivered in 2014, and include approximately $1.6 million in extra equipment. The total consideration for these two Ultramax newbuildings is $56.5 million.

Commenting on the developments, Paragon Shipping’s Chairman and CEO, Michael Bodouroglou, stated “The cancellation and reduction in price of the containership newbuilding improves the Company’s equity position, and gives Paragon greater flexibility as it can now take delivery of the one containership with little or no additional equity. We now have 13 vessels on the water and we believe this recent positive event will result in additional long-term growth for the Company. By acquiring the two additional Eco-Design Ultramax newbuildings, our newbuilding program has grown to six vessels, including the one containership, to be delivered starting December 2013 through to the middle of 2015. “