SEANERGY MARITIME CORP.
c/o Vgenopoulos and Partners Law Firm
15 Filikis Eterias Square
Athens, 106 73, Greece

 

To the Shareholders of Seanergy Maritime Corp.:

 

You are cordially invited to attend a special meeting of the shareholders of Seanergy Maritime Corp., a Marshall Islands company ( “Seanergy” ), which will be held at 10:00 a.m., Eastern Time, on August 14, 2008, at the offices of Loeb & Loeb LLP, 345 Park Avenue, New York, New York, 10154.

 

At this important meeting, you will be asked to consider and vote upon the following proposals:

 

 

Seanergy is a Business Combination Company ^tm , or BCC ^tm , which is a blank check company formed to acquire, through a merger, capital stock exchange, asset acquisition or similar business combination, one or more businesses or assets in the maritime shipping industry. On September 28, 2007, Seanergy consummated its initial public offering of 23,100,000 units, including 1,100,000 units issued upon the partial exercise of the underwriters’ over-allotment option, with each unit consisting of one share of its common stock and one warrant. Each warrant entitles the holder to purchase one share of Seanergy common stock at an exercise price of $6.50 per share. The units sold in Seanergy’s initial public offering were sold at an offering price of $10.00 per unit, generating gross proceeds of $231,000,000. This resulted in a total of $231,000,000 in net proceeds, including certain deferred offering costs

being held in a trust account maintained by Continental Stock Transfer & Trust Company, which we refer to as the Trust Account.

 

If Seanergy does not complete a business combination transaction by September 28, 2009, Seanergy’s corporate existence will terminate by operation of law and Seanergy will distribute to all of the holders of its shares issued in its initial public offering, $10.00 per share, plus a portion of the interest income on the Trust Account not previously distributed to its public shareholders (less taxes payable) and a pro rata share of any remaining available assets. Holders of 5,500,000 shares of Seanergy’s common stock, which were originally issued prior to Seanergy’s initial public offering (the “founding shares” ), have waived their respective rights to participate in any liquidation distribution with respect to such shares should Seanergy fail to consummate a business combination transaction. In the event of Seanergy’s dissolution and liquidation, it would not distribute funds from the Trust Account with respect to the Seanergy warrants, which would expire worthless.

 

A holder of shares of Seanergy common stock has the right to redeem such shares for a cash payment of $10.00 per share if such shareholder votes against the business combination and, at the same time, elects that Seanergy redeem such shares for cash, and the business combination is approved and completed. In order to exercise redemption rights, an eligible shareholder must vote against the vessel acquisition and elect to exercise redemption rights on the enclosed proxy card. If a shareholder votes against the vessel acquisition but fails to properly exercise redemption rights, such shareholder will not be entitled to have his/her shares redeemed for cash. Any request for redemption, once made, may be withdrawn at any time up to the date of the special meeting.

 

The board of directors of Seanergy has approved the above proposals and has fixed the close of business on July 25, 2008 as the record date (the “record date” ) for the determination of shareholders entitled to notice of and to vote at the special meeting and at any adjournment or postponement thereof. A list of shareholders as of the record date entitled to vote at the special meeting will be open to the examination of any shareholder, for any purpose germane to the special meeting, during ordinary business hours for a period of 10 calendar days before the special meeting at Seanergy’s offices at c/o Vgenopoulos and Partners Law Firm, 15 Filikis Eterias Square, Athens, 106 73, Greece, and at the time and place of the special meeting during the duration of the special meeting.

 

Proposal 1 will be approved if: (a) provided there is a quorum, holders of at least a majority of the shares of Seanergy’s common stock cast at the special meeting vote in favor of the vessel acquisition proposal; and (b) the holders of less than 35% of Seanergy’s common stock issued in its initial public offering (or 8,084,999 shares of common stock) both vote against the vessel acquisition proposal and properly exercise their redemption rights.

 

Proposal 2 will be approved if the holders of at least two-thirds of Seanergy’s outstanding common stock entitled to vote in person or by proxy at the meeting vote in favor of the dissolution and liquidation proposal. Notwithstanding the approval of the dissolution and liquidation, Seanergy will not consummate the dissolution and liquidation unless the vessel acquisition is also approved. Each of the dissolution and liquidation proposal and vessel acquisition proposal will be voted on separately.

 

The dissolution and liquidation, if approved, is expected to occur following the initial closing of the vessel acquisition, at such time as a registration statement under the Securities Act or an Information Statement under Section 14(a) of the Exchange Act, filed with the SEC by Seanergy Buyer relating to the dissolution and liquidation, is declared effective. Following the dissolution and liquidation, Seanergy Buyer will succeed Seanergy as a reporting company under the U.S. securities laws.

 

The vessel acquisition is intended to be a qualifying “business combination” under Seanergy’s certificate of incorporation, and as such, requires your approval.

 

In the event the vessel acquisition is not consummated, Seanergy may continue to seek an alternative target business. If the vessel acquisition is not completed, then your shares will not be redeemed at this time, even if you so demand. Holders of the founding shares have agreed to vote: (i) all of such founding shares in the same way as the majority of the shares voted by the public shareholders with respect to the vessel acquisition proposal and (ii) any shares of Seanergy common stock they acquired or may acquire in the future in favor of the vessel acquisition proposal.

After completion of the vessel acquisition, if no shareholder exercises his/her/its redemption rights, and assuming no warrants are exercised, public shareholders will continue to own approximately 55.02% of Seanergy and the holders of founding shares will own approximately 44.98% of Seanergy (including approximately 35.37% of Seanergy owned by the Investors).

 

Seanergy’s shares of common stock, warrants and units are listed on the American Stock Exchange under the symbols “SRG,” “SRG.WS” and “SRG.U,” respectively. On July 24, 2008, the closing price of the common stock was $9.87.

 

After careful consideration of the terms and conditions of the proposed vessel acquisition and dissolution and liquidation, the board of directors of Seanergy has determined that such proposals and the transactions contemplated thereby are in the best interests of Seanergy and its shareholders, and that such proposals and the transactions contemplated thereby are fair, from a financial point of view, to its shareholders. The board of directors of Seanergy recommends that you vote or give instruction to vote (i)  “FOR” the vessel acquisition proposal and (ii)  “FOR” the dissolution and liquidation proposal.

 

This proxy statement provides you with detailed information about the proposals, the transactions contemplated thereby and the special meeting of shareholders. We encourage you to read carefully this entire document and the documents incorporated by reference, including the transaction documents attached as annexes hereto.

 

YOU SHOULD ALSO CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 21.

 

This proxy statement may incorporate important business and financial information about Seanergy that is not included in or delivered with this document. This information is available without charge to security holders upon written or oral request. The request should be sent to:

 

Seanergy Maritime Corp.
c/o Vgenopoulos and Partners Law Firm
15 Filikis Eterias Square
Athens, 106 73, Greece
+30-210-7206900 Attn: Ioannis Tsigkounakis, or +30-210-3726200 Attn: Alexios Komninos

 

To obtain timely delivery of requested information, security holders must request the information no later than five days before the date they submit their proxies or attend the special meeting. The latest date to request the information to be received timely is August 7, 2008.

 

We are soliciting the proxy represented by the enclosed proxy card on behalf of the board of directors, and we will pay all costs of preparing, assembling and mailing the proxy materials. In addition to mailing our proxy materials, our officers may solicit proxies by telephone or fax, without receiving any additional compensation for their services. We have requested brokers, banks and nominees to forward proxy materials to the beneficial owners of our common stock. We have retained the proxy soliciting firm of Morrow & Co., LLC to assist in the solicitation of proxies and provide related advice and informational support. If you have any questions or need assistance in voting your shares, please contact Morrow & Co., LLC, toll free at 1-800-662-5200; banks and brokers may also call 1-800-662-5200.

 

THIS PROXY STATEMENT IS FIRST BEING MAILED TO SEANERGY SHAREHOLDERS ON OR ABOUT JULY 30, 2008.

 

YOUR VOTE IS IMPORTANT. WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING OR NOT, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED. IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED BY THE PROXY HOLDERS IN FAVOR OF EACH PROPOSAL. IF YOU ABSTAIN, (1) YOUR VOTE IS NOT CONSIDERED A VOTE CAST AT THE SPECIAL MEETING WITH RESPECT TO THE VESSEL ACQUISITION PROPOSAL AND THEREFORE YOUR VOTE WILL HAVE NO EFFECT ON THE VOTE RELATING TO THE VESSEL ACQUISITION, (2) YOUR VOTE WILL HAVE THE EFFECT OF A VOTE AGAINST THE OUTCOME OF THE DISSOLUTION AND LIQUIDATION PROPOSAL AND (3) YOUR VOTE WILL HAVE THE EFFECT OF A VOTE AGAINST THE OUTCOME OF THE APPROVAL OF ANY OTHER

PROPOSALS. A VOTE AGAINST THE VESSEL ACQUISITION PROPOSAL WILL NOT HAVE THE EFFECT OF REDEEMING YOUR SHARES UNLESS YOU ALSO DEMAND REDEMPTION AND COMPLY WITH THE OTHER REQUIREMENTS APPLICABLE THERETO.

 

NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

Enclosed are a notice of special meeting and proxy statement containing detailed information concerning the proposals and the transactions contemplated thereby. Whether or not you plan to attend the special meeting, we urge you to read this material carefully.

 

Sincerely,

 

Dale Ploughman
Director and Chief Executive Officer of Seanergy Maritime Corp.

 

July 30, 2008

SEANERGY MARITIME CORP.
c/o Vgenopoulos and Partners Law Firm
15 Filikis Eterias Square
Athens, 106 73, Greece

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 14, 2008

 

TO THE SHAREHOLDERS OF SEANERGY MARITIME CORP.:

 

NOTICE IS HEREBY GIVEN that a special meeting of shareholders, including any adjournments or postponements thereof, of Seanergy Maritime Corp., a Marshall Islands corporation ( “Seanergy” ), will be held at 10:00 a.m. Eastern Standard Time, on August 14, 2008, at the offices of Loeb & Loeb LLP, 345 Park Avenue, New York, New York, 10154, for the following purposes:

 

 

The board of directors of Seanergy has fixed the close of business on July 25, 2008, as the record date for the determination of shareholders entitled to receive notice of and to vote at the special meeting and any adjournments or postponements thereof. Only the holders of record of Seanergy common stock on that date are entitled to have their votes counted at the special meeting and any adjournments or postponements thereof.

 

Seanergy will not transact any other business at the special meeting, except for business properly brought before the special meeting, or any adjournment or postponement thereof, by Seanergy’s board of directors.

Your vote is important regardless of the number of shares you own. Please sign, date and return your proxy card as soon as possible to make sure that your shares are represented at the special meeting.

 

The board of directors of Seanergy recommends that you vote (i)  “FOR” the vessel acquisition proposal, and (ii)  “FOR” the dissolution and liquidation proposal.

 

If you wish to attend the special meeting in person, please so indicate where requested on the accompanying proxy card. In addition, please write your name, where indicated, on the attached admission ticket and bring it with you to the special meeting. Due to space limitations, we request that only one guest accompany you to the special meeting.

 

By Order of the Board of Directors,

 

Dale Ploughman
Director and Chief Executive Officer of Seanergy
Maritime Corp.

 

July 30, 2008

 

PROXY STATEMENT FOR SPECIAL MEETING OF
SHAREHOLDERS OF SEANERGY MARITIME CORP.
TO BE HELD ON AUGUST 14, 2008

DEFINITIONS USED FOR EASE OF REFERENCE

 

Unless otherwise stated, references to the following terms shall have the following meaning:

 

“Brokerage Agreement” means the Commercial Management Agreement, dated as of May 20, 2008, by and between Safbulk Pty, Ltd., a South African corporation, and Seanergy Management Corp. a Marshall Islands corporation and wholly owned subsidiary of Seanergy Buyer (as amended from time to time);

 

“common stock” means common stock, par value $.0001 per share of Seanergy, and “shares” mean shares of common stock;

 

“debt financing” means the debt financing to be obtained by Seanergy in the principal amount of up to approximately $255,000,000 depending upon how many shareholders exercise their redemption rights;

 

“Dollars” mean United States dollars;

 

“founding shareholders” mean persons and entities that held founding shares immediately prior to our initial public offering and any transferees thereof, including the Investors;

 

“founding shares” mean 5,500,000 shares of common stock, which were originally issued prior to our initial public offering;

 

“initial closing” means the first closing of the vessel acquisition;

 

“Investor” or “Investors” means United Capital Investments Corp., Atrion Shipholding S.A., Plaza Shipholding Corp. and Comet Shipholding, Inc., individually or collectively each an affiliate of members of the Restis family;

 

“IPO” or “initial public offering” means the initial public offering of Seanergy consummated on September 28, 2007;

 

“Management Agreement” means the Management Agreement, dated as of May 20, 2008, by and between Enterprise Shipping and Trading S.A., a Liberian corporation, and Seanergy Management Corp. a Marshall Islands corporation and wholly-owned subsidiary of Seanergy Buyer (as amended from time to time);

 

“Master Agreement” means the Master Agreement, dated as of May 20, 2008, by and among Seanergy, Seanergy Buyer, the Sellers, and Investors (as amended from time to time);

 

“MOA” or “MOAs” means the six separate Memoranda of Agreement, each dated as of May 20, 2008, by and between each of Seanergy Buyer’s vessel-owning subsidiaries and each Seller with respect to the sale and transfer of one of six dry bulk carriers, including a newly built vessel and one vessel currently under construction (each as amended from time to time);

 

“Note” or “convertible promissory note” means the convertible promissory note in the principal amount of $28,250,000 (convertible into 2,260,000 shares of common stock of Seanergy Buyer) to be issued by Seanergy Buyer to the Investors at the initial closing of the vessel acquisition (as amended from time to time);

 

“Original Founders” means Mr. Georgios Koutsolioutsos, a director and chairman of the board of directors of Seanergy and Seanergy Buyer, Mr. Alexios Komninos, a director and the chief financial officer of Seanergy and Seanergy Buyer, and Mr. Ioannis Tsigkounakis, a director and the secretary of Seanergy and Seanergy Buyer;

 

“pre-offering private placement” means the private placement consummated prior to our initial public offering of an aggregate of 16,016,667 warrants at a purchase price of $.90 per warrant;

 

“private placement warrants” means the 16,016,667 warrants issued (or subsequently transferred) to the founding shareholders in connection with the pre-offering private placement prior to the completion of the IPO;

 

“public shareholders” mean persons who acquired shares included in the units sold in our IPO, whether in such offering or in the open market after such offering;

 

“public shares” mean shares included in the units sold in our IPO, whether the holder thereof acquired such shares in such offering or in the open market after such offering;

“redemption right” means the right, available under our amended and restated articles of incorporation, to a public shareholder who affirmatively votes against the vessel acquisition proposal, to redeem each of his shares into cash in an amount equal to the redemption price per share, and “redemption price per share” means an amount equal to $10.00 per share, which redemption will be effected only if the vessel acquisition is approved as described in this proxy statement and consummated;

 

“Seanergy Buyer” means Seanergy Maritime Holdings Corp. (f/k/a Seanergy Merger Corp.), a wholly owned subsidiary of Seanergy formed under the laws of the Marshall Islands;

 

“Seller” or “Sellers” means Valdis Marine Corp., a Marshall Islands corporation, Goldie Navigation Ltd., a Marshall Islands corporation, Kalistos Maritime S.A., a Marshall Islands corporation, Kalithea Maritime S.A., a Marshall Islands corporation, Pavey Services Ltd., a British Virgin Islands company, and Shoreline Universal Limited, a British Virgin Islands company each an affiliate of members of the Restis family;

 

“transaction documents” means the Master Agreement, the Voting Agreement, the Registration Rights Agreement, the Note, the Right of First Refusal Agreements, the Management Agreement, the Brokerage Agreement and each MOA, each as amended from time to time;

 

“Trust Account” means the trust account maintained at HSBC Bank Plc., London, England, held by Continental Stock Transfer & Trust Company, as trustee, in which $231,000,000 of the proceeds of our initial public offering (or $10.00 per unit sold, including the deferred underwriters’ discount and commissions of $5,362,500) were deposited and will be held until the earlier of the consummation of our initial business combination within the time period and on the terms described in our amended and restated articles of incorporation or, if we fail to consummate such a combination, our dissolution and liquidation as required by our amended and restated articles of incorporation;

 

“Vessel acquisition” or “acquisition” means the proposed acquisition by Seanergy Buyer’s vessel-owning subsidiaries of six dry bulk carriers, including a newly built vessel and one vessel currently under construction, under the terms and conditions of the Master Agreement and the several MOAs, each dated May 20, 2008 (as amended from time to time);

 

“Vessel-owning subsidiaries” or “vessel-owning subsidiary” means each of Martinique International Corp., Harbour Business International Corp., Amazons Management Inc., Lagoon Shipholding Ltd., Cynthera Navigation Ltd., and Waldeck Maritime Co., each a direct subsidiary of Seanergy Buyer and indirect subsidiary of Seanergy, which entities have joined the Master Agreement, pursuant to those certain Acknowledgement and Agreements, dated May 26, 2008 (included as Annex S-1 through S-6 ), and which entities have assumed the rights and obligations of Seanergy under the several MOAs, pursuant to those certain Agreements, dated May 26, 2008 (included as Annex T-1 through T-6 );

 

“Voting Agreement” means the Voting Agreement, dated as of May 20, 2008, by and among Seanergy, Mr. Panagiotis Zafet, Mr. Simon Zafet, the Investors, and the Original Founders (as amended from time to time); and

 

“We,” “us,” “our” or “Seanergy” means Seanergy Maritime Corp., and, if the context otherwise requires, may also refer to Seanergy Maritime Corp. and all of its direct and indirect subsidiaries.

 

 

SUMMARY OF THE MATERIAL TERMS OF THE BUSINESS COMBINATION

*		Enterprise Shipping and Trading, S.A., South African Marine Corporation S.A. and Safbulk Pty Ltd., are each affiliated with members of the Restis family.
**		On May 20, 2008, each of United Capital Investments Corp., Atrion Shipholding S.A., Plaza Shipholding Corp. and Comet Shipholding Inc. is an affiliate of members of the Restis family and purchased 687,500 shares of Seanergy common stock (for an aggregate of 2,750,000 shares) from Messrs. Panagiotis and Simon Zafet, each of whom was an officer and director of the Seanergy. These shares are subject to the same restrictions as the founding shares issued to our Original Founders. This percentage includes (i) an additional 7,294,761 shares of common stock purchased by United Capital Investment Corp. in the open market on June 5, 2008 and June 10, 2008 and in privately negotiated transactions on July 15, 2008, July 23, 2008 and July 24, 2008, a portion of which was subsequently transferred by United to the other Investors; and (ii) an additional 70,000 shares of common stock purchased by Argonaut SPC, a fund whose investment manager is an affiliate of members of the Restis family, in the open market on July 23, 2008. This percentage does not include up to an aggregate of 2,260,000 shares of Seanergy Buyer common stock issuable to these entities if they convert the Note and up to an aggregate of 4,308,075 shares of Seanergy Buyer common stock issuable to these entities if Seanergy Buyer achieves certain earnings thresholds, for a total of up to an aggregate of 6,568,075, which shares are exchangeable for Seanergy common stock on a one-for-one basis and, if exchanged, would increase their beneficial ownership to approximately 47.44%. This percentage does not include shares of common stock issuable upon exercise of warrants that are not exercisable in the next 60 days.

 

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

Sources of Funds		Dollars				Uses of Funds		Dollars
Debt financing		$	157,030,750			Cash paid to Sellers		$	367,030,750
Cash from Trust Account			231,000,000			Shareholder redemption			0
Seanergy cash on hand			1,500,000			Note			28,250,000
Note			28,250,000			Transaction expenses
						Deferred underwriting discount			5,362,500
						Legal fees and expenses			1,250,000
						Printing and engraving expenses			100,000
						Accounting fees and expenses			50,000
						Miscellaneous expenses			7,905,686
						Working capital			7,831,814
Total sources		$	417,780,750			Total uses		$	417,780,750

 

SUMMARY OF THE PROXY STATEMENT

	•	Seanergy’s shareholders have approved the vessel acquisition proposal;
	•	public shareholders owning less than 35% of the Seanergy public shares, or 8,084,999 shares of common stock, vote against the vessel acquisition proposal and properly exercise their redemption rights; and
	•	the other conditions specified in the Master Agreement and the MOAs have been satisfied or waived.

						Percentage of								Percentage of
						Outstanding								Outstanding
		Voting				Common				Investment				Common
Name and Address of Beneficial Owner(1)		Power(2)				Stock				Power(2)				Stock
Georgios Koutsolioutsos			5,592,680	(3)(4)			19.55	%			2,402,680	(6)			8.40	%
Alexios Komninos			5,500,000	(3)			19.23	%			302,500	(6)			1.06	%
Ioannis Tsigkounakis			5,500,000	(3)			19.23	%			137,500	(6)			*
Dale Ploughman			0				*				0				*
Kostas Koutsoubelis			0				*				0				*
Elias M. Culucundis			0				*				0				*
United Capital Investments Corp.(10)			7,853,441	(3)(5)			27.46	%			3,040,941	(6)			10.63	%
Atrion Shipholding S.A.(10)			7,170,440	(3)(7)			25.07	%			2,357,940	(6)			8.24	%
Plaza Shipholding Corp.(10)			7,240,440	(3)(8)			25.32	%			2,427,940	(6)			8.49	%
Comet Shipholding Inc.(10)			7,170,440	(3)(9)			25.07	%			2,357,940	(6)			8.24	%
QVT Financial LP(11)			1,800,670				6.30	%			1,800,670				6.30	%
HBK Investments LP(12)			2,314,587				8.09	%			2,314,587				8.09	%
Fir Tree, Inc.(13)			1,760,000				6.15	%			1,760,000				6.15	%
All directors and executive officers as a group (6 individuals)			5,592,680	(3)			19.55	%			2,842,680	(6)			9.94	%

*		Less than one (1%) percent.
(1)		Unless otherwise indicated, the business address of each of the shareholders is c/o Vgenopoulos and Partners Law Firm, 15 Filikis Eterias Square, Athens, 106 73, Greece.
(2)		Does not include shares of common stock issuable upon exercise of warrants that are not exercisable in the next 60 days.
(3)		Includes an aggregate of 5,500,000 shares of our common stock owned by the Investors and the Original Founders, which are subject to the Voting Agreement described below.
(4)		Includes 92,680 shares of our common stock purchased July 23, 2008, as to which Mr. Koutsolioutsos has sole voting power.
(5)		Includes 2,283,441 shares of our common stock purchased on June 5, 2008, June 10, 2008, July 15, 2008, July 23, 2008 and July 24, 2008, as to which United Capital Investments Corp. has sole voting power. In

		addition, includes 70,000 shares of common stock owned by Argonaut SPC, a fund managed by Oxygen Capital AEPEY an entity affiliated with members of the Restis family.
(6)		None of the Investors or Original Founders has shared investment power with respect to any of the shares beneficially owned, except for 70,000 shares included for United Capital Investments Corp. and Plaza Shipholding Corp. as to which each of United and Plaza have shared voting power.
(7)		Includes 1,670,440 shares of our common stock purchased by United Capital Investments Corp. on July 15, 2008, July 23, 2008 and July 24, 2008 and subsequently transferred to Atrion Shipholding S.A., as to which Atrion has sole voting power.
(8)		Includes 1,670,440 shares of our common stock purchased by United Capital Investments Corp. on July 15, 2008, July 23, 2008 and July 24, 2008 and subsequently transferred to Plaza Shipholding Corp., as to which Plaza has sole voting power. In addition, includes 70,000 shares of our common stock owned by Argonaut SPC, a fund managed by Oxygen Capital AEPEY, an entity affiliated with members of the Restis Family.
(9)		Includes 1,670,440 shares of our common stock purchased by United Capital Investments Corp. on July 15, 2008, July 23, 2008 and July 24, 2008 and subsequently transferred to Comet Shipholding Inc., as to which Comet has sole voting power.
(10)		On May 20, 2008, each of United Capital Investments Corp., Atrion Shipholding S.A., Plaza Shipholding Corp. and Comet Shipholding Inc. purchased 687,500 shares of Seanergy common stock (for an aggregate of 2,750,000 shares) from Messrs. Panagiotis and Simon Zafet, each of whom was a former officer and director of Seanergy. These shares are subject to the same restrictions as the founding shares issued to our Original Founders. Does not include up to an aggregate of 2,260,000 shares of Seanergy Buyer common stock issuable to these entities if they convert the Note and up to an aggregate of 4,308,075 shares of Seanergy Buyer common stock issuable to these entities if Seanergy Buyer achieves certain earnings thresholds, for a total of up to an aggregate of 6,568,075, which shares are exchangeable for Seanergy common stock on a one-for-one basis. Each of United Capital Investments Corp., Atrion Shipholding S.A., Plaza Shipholding Corp. and Comet Shipholding Inc. is an affiliate of members of the Restis family. The address of each of United Capital Investments Corp., Atrion Shipholding S.A., Plaza Shipholding Corp., and Comet Shipholding Inc., is c/o 11 Poseidonos Avenue, 16777 Elliniko, Athens, Greece, Attn: Evan Breibart.
(11)		Represents the aggregate holdings of QVT Financial LP, QVT Financial GP LLC, QVT Fund LP, and QVT Associates GP LLC. Based on an amended Schedule 13G filed on January 25, 2008, QVT Financial LP is the beneficial owner of 1,800,670 shares (or 6.30% of our outstanding common stock); QVT Financial GP LLC is the beneficial owner of 1,800,670 shares (or 6.30% of our outstanding common stock); QVT Fund LP is the beneficial owner of 1,483,397 shares (or 5.19% of our outstanding common stock); and QVT Associates GP LLC is the beneficial owner of 1,643,519 shares (or 5.75% of our outstanding common stock). The address of each of QVT Financial LP, QVT Financial GP LLC and QVT Associates GP LLC is 1177 Avenue of the Americas, 9th Floor, New York, New York 10036. The address of QVT Fund LP is Walkers SPV, Walkers House, Mary Street, George Town, Grand Cayman, KY1 9001 Cayman Islands.
(12)		Represents the aggregate holdings of HBK Investments LP, HBK Services LLC, HBK Partners II LP, HBK Management LLC, and HBK Master Fund LP. Based on an amended Schedule 13G filed on February 8, 2008, each of HBK Investments LP, HBK Services LLC, HBK Partners II LP, HBK Management LLC, and HBK Master Fund LP is the beneficial owner of 2,314,587 shares (or 8.09% of our outstanding common stock). The address of each of HBK Investments L.P., HBK Services LLC, HBK Partners II L.P., HBK Management LLC, and HBK Master Fund L.P. is 300 Crescent Court, Suite 700, Dallas, Texas 75201.
(13)		Represents the aggregate holdings of Fir Tree, Inc., Fir Tree Capital Opportunity Master Fund, LP, and Sapling LLC. Based on an amended Schedule 13G filed on February 14, 2008, Fir Tree, Inc. is the beneficial owner of 1,760,000 shares (or 6.15% of our outstanding common stock); Sapling LLC is the beneficial owner of 1,514,500 shares (or 5.30% of our outstanding common stock); and Fir Tree Capital Opportunity Master Fund LP is the beneficial owner of 245,500 shares (or less than 1% of our outstanding common stock). The address of each of Fir Tree, Inc. and Sapling, LLC is 505 Fifth Avenue, 23rd Floor, New York, NY 10017. The address of Fir Tree Capital Opportunity Master Fund, L.P. is c/o Admiral Administration Ltd., Admiral Financial Center, 5th Floor, 90 Fort Street, Box 32021 SMB, Grand Cayman Islands, Cayman Islands.

 

COMBINED SELECTED HISTORICAL FINANCIAL INFORMATION AND OTHER
DATA FOR THE VESSELS

		Year Ended
		December 31,
		2007				2006				2005
Statement of Operations Data:
Revenue		$	32,297			$	15,607			$	17,016
Revenue from vessel, related party			3,420				10,740				10,140
Direct voyage expenses			(82	)			(64	)			(139	)
Crew cost			(2,803	)			(2,777	)			(1,976	)
Other operating expenses			(3,228	)			(2,842	)			(3,085	)
Depreciation expense			(12,625	)			(6,567	)			(6,970	)
Impairment reversal/ (loss)			—				19,311				(19,311	)
Management fees to a related party			(782	)			(752	)			(644	)
Finance income			143				132				24
Finance expense			(2,980	)			(3,311	)			(2,392	)
Net profit/(loss)		$	13,360			$	29,477			$	(7,337	)

		December 31,
		2007				2006
Balance Sheet Data:
Total current assets		$	7,005			$	5,842
Vessels			244,801				114,487
Total assets			251,806				120,809
Total current liabilities, including current portion of long-term debt			13,569				10,396
Long-term debt			38,580				41,354
Total shareholders’ equity		$	199,657			$	69,059

PERFORMANCE INDICATORS

 

		Year Ended
		December 31,
		2007				2006				2005
Fleet Data:
Average number of vessels(1)			3.85				3.81				3.21
Ownership days(2)			1,460				1,460				1,250
Available days(3) (equals operating days for the three-year period(4))			1,411				1,393				1,166
Fleet utilization(5)			97	%			95	%			93	%
Average Daily Results:
Average TCE rate(6)		$	25,256			$	18,868			$	23,170
Vessel operating expenses(7)		$	4,130			$	3,849			$	4,049
Management fees(8)		$	535			$	515			$	515
Total vessel operating expenses(9)		$	4,665			$	4,364			$	4,564

(1)		Average number of vessels is the number of vessels that constituted the Sellers’ fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of the Sellers’ fleet during the period divided by the number of calendar days in the period.
(2)		Ownership days are the total number of days in a period during which the vessels in a fleet have been owned. Ownership days are an indicator of the size of the Sellers, fleet over a period and affect both the amount of revenues and the amount of expenses that the Sellers record during a period.
(3)		Available days are the number of ownership days less the aggregate number of days that vessels are off-hire due to major repairs, drydockings or special or intermediate surveys. The shipping industry uses available days to measure the number of ownership days in a period during which vessels should be capable of generating revenues.
(4)		Operating days are the number of available days less the aggregate number of days that vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
(5)		Fleet utilization is calculated by dividing the number of the fleet’s operating days during a period by the number of ownership days during the period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons such as scheduled repairs, vessel upgrades, or drydockings or other surveys.
(6)		Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. The Sellers’ method of calculating TCE is consistent with industry standards and is determined by dividing operating revenues (net of voyage expenses) by operating days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods:

		Year Ended
		December 31,
		2007				2006				2005
Revenues from vessels		$	35,717			$	26,347			$	27,156
Direct voyage expenses			(82	)			(64	)			(139	)
Net operating revenues		$	35,635			$	26,283			$	27,017
Operating days			1,411				1,393				1,166
Time charter equivalent rates		$	25,256			$	18,868			$	23,170

(7)		Average daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, is calculated by dividing vessel operating expenses by ownership days for the relevant time periods:

		Year Ended December 31,
		2007				2006				2005
Crew costs and other operating expenses		$	6,031			$	5,619			$	5,061
Ownership days			1,460				1,460				1,250
Daily vessel operating expense		$	4,130			$	3,849			$	4,049

(8)		Daily management fees are calculated by dividing total management fees by ownership days for the relevant time period.
(9)		Total vessel operating expenses, or TVOE, is a measurement of total expenses associated with operating the vessels. TVOE is the sum of vessel operating expenses and management fees. Daily TVOE is calculated by dividing TVOE by fleet ownership days for the relevant time period.

 

PER SHARE MARKET PRICE INFORMATION

		Common Stock								Warrants								Units
Quarter Ended		High				Low				High				Low				High				Low
September 30, 2007			N/A				N/A				N/A				N/A			$	10.42			$	10.35
December 31, 2007		$	9.64			$	9.30			$	1.63			$	1.20			$	11.10			$	10.38
March 31, 2008		$	9.50			$	9.21			$	1.35			$	0.38			$	10.75			$	9.55
June 30, 2008		$	9.81			$	9.66			$	1.99			$	1.81				N/A				N/A

 

You should carefully consider the following risk factors, together with all of the other information included in this proxy statement, before you decide whether to vote or instruct your vote to be cast to approve the proposals.

 

Risk Factors Relating to Seanergy after the Business Combination

 

Seanergy has no operating history and may not operate profitably in the future.

 

Seanergy was formed on August 15, 2006. Seanergy and Seanergy Buyer, Seanergy’s wholly owned subsidiary, have entered into definitive agreements to acquire six dry bulk carriers, including a newly built vessel and one vessel currently under construction. However, Seanergy has no operating history. Its financial statements do not provide a meaningful basis for you to evaluate its operations and ability to be profitable in the future. Seanergy may not be profitable in the future.

 

If any of the six dry bulk carriers in Seanergy’s fleet are not delivered on time or delivered with significant defects, Seanergy’s proposed business, results of operations and financial condition could suffer.

 

Seanergy has entered into separate MOAs with the Sellers to acquire the six dry bulk carriers, including a newly built vessel and one vessel currently under construction, as its initial fleet. On May 26, 2008, Seanergy Buyer’s vessel-owning subsidiaries assumed Seanergy’s rights and obligations under the several MOA’s. On the initial closing date, title to, and delivery of, such number of vessels, together with contract rights to purchase vessels, whose aggregate fair market value is equal at least to 80% of the amount in the Trust Account (excluding deferred underwriting discounts and commissions in the amount of $5,362,500), will be transferred and effectuated by the Seller of each vessel to Seanergy Buyer’s respective vessel-owning subsidiaries in accordance with the terms and conditions of each MOA relating to each such vessel. Seanergy Buyer’s vessel-owning subsidiaries expect to take delivery of the remaining vessels within 60 days after the initial closing except for the vessel under construction, which we expect to take delivery of in 2009. A delay in the delivery of any of these vessels to Seanergy Buyer’s vessel-owning subsidiaries or the failure of any Seller to deliver a vessel at all could adversely affect Seanergy’s business, results of operations and financial condition. The delivery of these vessels could be delayed or certain events may arise which could result in Seanergy Buyer’s vessel-owning subsidiaries not taking delivery of a vessel, such as a total loss of a vessel, a constructive loss of a vessel, substantial damage to a vessel prior to delivery or failure by a shipyard to deliver a vessel under construction to the relevant Seller. In addition, the delivery of any of these vessels with substantial defects could have similar consequences.

 

If Seanergy and Seanergy Buyer fail to manage their planned growth properly, they may not be able to successfully expand their fleet, adversely affecting overall financial position.

 

While Seanergy and Seanergy Buyer have no plans to immediately expand their fleet, they do intend to continue to expand their fleet in the future. Growth will depend on:

 

 

Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty experienced in obtaining additional qualified personnel, managing relationships with customers and suppliers and integrating newly acquired operations into existing infrastructures. Neither Seanergy nor Seanergy Buyer has identified expansion opportunities, and the nature and timing of any such expansion is uncertain. Seanergy and Seanergy Buyer may not be successful in growing and may incur significant expenses and losses.

Our management made certain assumptions about the future operating results of Seanergy that may differ significantly from its actual results, which may result in shareholder claims against Seanergy or its directors.

 

Our management made certain assumptions about the future operating results for the business of Seanergy, set forth in the section entitled, “Statement of Forecasted Results of Operations and Cash Available for Dividends, Reserves and Extraordinary Expenses” and other sections herein. To the extent the actual results are significantly lower than the projected results, there could be adverse consequences to Seanergy. These consequences could include potential claims by shareholders against Seanergy’s directors for violating their fiduciary duties to shareholders in recommending a transaction that was not fair to shareholders. Any such claims, even if ultimately unsuccessful, would divert financial resources and management’s time and attention from the operating the business of Seanergy.

 

Seanergy’s future debt financing may contain restrictive covenants that may limit its liquidity and corporate activities.

 

The debt financing that Seanergy expects to enter into and any future loan agreements it may execute impose operating and financial restrictions on it. These restrictions may limit its ability to:

 

 

Therefore, Seanergy may need to seek permission from its lenders in order to engage in some important corporate actions. Any future lenders’ interests may be different from those of Seanergy, and Seanergy cannot guarantee that it will be able to obtain such lenders’ permission when needed. This may prevent Seanergy from taking actions that are in its best interest.

 

Servicing debt will limit funds available for other purposes, including capital expenditures and payment of dividends.

 

Pursuant to a loan facility with Marfin Egnatia Bank S.A., we can borrow up to a maximum of $255 million of indebtedness in connection with the purchase of the vessels, depending upon how many public shareholders exercise their redemption rights. Seanergy will be required to dedicate a portion of its cash flow from operations to pay the principal and interest on its debt. These payments limit funds otherwise available for working capital expenditures and other purposes, including payment of dividends. Seanergy has not yet determined whether to purchase additional vessels or incur debt in the near future for additional vessel acquisitions. If Seanergy is unable to service its debt, it could have a material adverse effect on Seanergy’s financial condition and results of operations.

 

In the highly competitive international dry bulk shipping industry, Seanergy may not be able to compete for charters with new entrants or established companies with greater resources, which may adversely affect its results of operations.

 

Seanergy will employ its fleet in a highly competitive market that is capital intensive and highly fragmented. Competition arises primarily from other vessel owners, some of whom have substantially greater resources than Seanergy. Competition for the transportation of dry bulk cargoes can be intense and depends on price, location, size, age, condition and the acceptability of the vessel and its managers to the charterers. Due in part to the highly fragmented market, competitors with greater resources could operate larger fleets through consolidations or acquisitions that may be able to offer better prices and fleets.

Our charterers may terminate or default on their obligations to us, which could adversely affect our results of operations and cash flow.

 

We will charter all six vessels to be acquired as part of the vessel acquisition to South African Marine Corporation S.A., or SAMC, a company affiliated with members of the Restis family, and therefore will be dependent on performance by our charterer. Our charters may terminate earlier than the dates indicated in this proxy statement. Under our charter agreements, the events or occurrences that will cause a charter to terminate or give the charterer the option to terminate the charter generally include a total or constructive total loss of the related vessel, the requisition for hire of the related vessel or the failure of the related vessel to meet specified performance criteria. In addition, the ability of our charterer to perform its obligations under a charter will depend on a number of factors that are beyond our control. These factors may include general economic conditions, the condition of the dry bulk shipping industry, the charter rates received for specific types of vessels and various operating expenses. The costs and delays associated with the default by a charterer of a vessel may be considerable and may adversely affect our business, results of operations, cash flows, financial condition and our ability to pay dividends.

 

We cannot predict whether our charterer will, upon the expiration of its charters, re-charter our vessels on favorable terms or at all. If our charterer decides not to re-charter our vessels, we may not be able to re-charter them on terms similar to our current charters or at all. In the future, we may also employ our vessels on the spot charter market, which is subject to greater rate fluctuation than the time charter market.

 

If we receive lower charter rates under replacement charters or are unable to re-charter all of our vessels, the amounts available, if any, to pay dividends to our shareholders may be significantly reduced or eliminated.

 

Because SAMC is the sole counterparty on time charters for all six vessels in our initial fleet, the failure of such counterparty to meet its obligations could cause us to suffer losses on such contracts, thereby decreasing revenues.

 

SAMC, which is controlled by members of the Restis family, is the counterparty on time charters for all six vessels in our initial fleet. If SAMC fails to meet its obligations to us under the time charters, we may have to enter into charters at lower rates, which could materially adversely affect our financial condition and results of operations. It is also possible that we may be unable to secure one or more replacement charters at all. If we re-charter the vessels at lower rates, our financial condition and results of operations could be materially adversely affected.

 

We will not be able to take advantage of favorable opportunities in the current spot market with respect to vessels employed on medium-term time charters.

 

All of the six vessels in our fleet will be employed under medium-term time charters, with expiration dates ranging from 11 months to 13 months from the time of delivery. Although medium-term time charters provide relatively steady streams of revenue, vessels committed to medium-term charters may not be available for spot voyages during periods of increasing charter hire rates, when spot voyages might be more profitable.

 

Seanergy may be unable to attract and retain key management personnel and other employees in the shipping industry, which may negatively affect the effectiveness of its management and its results of operations.

 

Seanergy’s success will depend to a significant extent upon the abilities and efforts of its management team. Following the initial closing, Seanergy will have only three employees, its chief executive officer, chief financial officer and secretary. Seanergy’s management does not currently have any employees. Seanergy’s success will depend upon its ability to retain key members of its management team and the ability of Seanergy management to recruit and hire suitable employees. The loss of any of these individuals could adversely affect Seanergy’s business prospects and financial condition. Difficulty in hiring and retaining personnel could adversely affect Seanergy’s results of operations.

We will be dependent on each of EST and Safbulk for the management and commercial brokerage of our fleet.

 

We currently anticipate that, after the initial closing, Mr. Dale Ploughman, our chief executive officer, Mr. Alexios Komninos, our chief financial officer and Mr. Ioannis Tsigkounakis, our secretary, will be our only officers, and we currently have no plans to hire additional officers. As we subcontract the management and commercial brokerage of our fleet, including crewing, maintenance and repair, to each of EST and Safbulk, both affiliates of members of the Restis family, the loss of services of, or the failure to perform by, either of these entities could materially and adversely affect our results of operations. Although we may have rights against either of these entities if they default on their obligations to us, you will have no recourse directly against them. Further, we expect that we will need to seek approval from our lenders to change our manager.

 

EST, Safbulk and SAMC are privately-held companies and there is little or no publicly available information about them.

 

The ability of EST and Safbulk to continue providing services for our benefit and for SAMC to continue performing under the charters will depend in part on their respective financial strength. Circumstances beyond our control could impair their financial strength, and because they are privately held, it is unlikely that information about their financial strength would become public unless any of these entities began to default on their respective obligations. As a result, our shareholders might have little advance warning of problems affecting EST, Safbulk or SAMC, even though these problems could have a material adverse effect on us.

 

We will outsource the management and commercial brokerage of our fleet to companies that are affiliated with members of the Restis family, which may create conflicts of interest.

 

We will outsource the management and commercial brokerage of our fleet to EST and Safbulk, companies that are affiliated with members of the Restis family. Companies affiliated with members of the Restis family own and may acquire vessels that compete with our fleet. Both EST and Safbulk have responsibilities and relationships to owners other than Seanergy which could create conflicts of interest between us, on the one hand, and EST or Safbulk, on the other hand. These conflicts may arise in connection with the chartering of the vessels in our fleet versus dry bulk carriers managed by other companies affiliated with members of the Restis family.

 

Risks involved with operating ocean-going vessels could affect Seanergy’s business and reputation, which would adversely affect our revenues.

 

The operation of an ocean-going vessel carries inherent risks. These risks include the possibility of:

 

 

Any of these circumstances or events could increase Seanergy’s costs or lower its revenues.

 

Seanergy’s vessels may suffer damage and Seanergy may face unexpected drydocking costs, which could adversely affect its cash flow and financial condition.

 

If Seanergy’s vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and can be substantial. Seanergy may have to pay drydocking costs that its insurance does not cover. The loss of earnings while these vessels are being repaired and reconditioned may not be

covered by insurance in full and thus these losses, as well as the actual cost of these repairs, would decrease its earnings.

 

Purchasing and operating second hand vessels may result in increased operating costs and vessel off-hire, which could adversely affect Seanergy’s earnings.

 

Seanergy’s inspection of second hand vessels prior to purchase does not provide it with the same knowledge about their condition and cost of any required or anticipated repairs that it would have had if these vessels had been built for and operated exclusively by Seanergy. Except for the two newly constructed vessels, Seanergy will not receive the benefit of warranties on second hand vessels.

 

In general, the costs to maintain a dry bulk carrier in good operating condition increase with the age of the vessel. The average age of the four second hand vessels in our initial fleet of six dry bulk carriers that we have agreed to acquire from the Sellers is approximately 10.5 years. The newly built vessel and the vessel under construction will have a useful life of 25 years. Older vessels are typically less fuel-efficient and more costly to maintain than more recently constructed dry bulk carriers due to improvements in engine technology. Cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers.

 

Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to Seanergy’s vessels and may restrict the type of activities in which the vessels may engage. As Seanergy’s vessels age, market conditions may not justify those expenditures or enable Seanergy to operate its vessels profitably during the remainder of their useful lives.

 

Seanergy has inspected the second hand vessels that it will acquire from the Sellers, has considered the age and condition of the vessels in budgeting for operating, insurance and maintenance costs, and that if Seanergy acquires additional second hand vessels in the future, it may encounter higher operating and maintenance costs due to the age and condition of those additional vessels.

 

Rising fuel prices may adversely affect our profits.

 

The cost of fuel is a significant factor in negotiating charter rates. As a result, an increase in the price of fuel beyond our expectations may adversely affect our profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geo-political developments, supply and demand for oil, actions by members of the Organization of the Petroleum Exporting Countries and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns and regulations.

 

Seanergy’s worldwide operations will expose it to global risks that may interfere with the operation of its vessels.

 

Seanergy is expected to conduct its operations worldwide. Changing economic, political and governmental conditions in the countries where Seanergy is engaged in business or in the countries where Seanergy intends to register its vessels, affect Seanergy’s operations. In the past, political conflicts, particularly in the Persian Gulf, resulted in attacks on vessels, mining of waterways and other efforts to disrupt shipping in the area. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea and off the coast of Somalia. The likelihood of future acts of terrorism may increase, and Seanergy’s vessels may face higher risks of being attacked. In addition, future hostilities or other political instability in regions where Seanergy’s vessels trade could have a material adverse effect on its trade patterns and adversely affect its operations and performance.

 

Seanergy may not have adequate insurance to compensate it if it loses its vessels, which may have a material adverse effect on its financial condition and results of operation.

 

Seanergy is expected to procure hull and machinery insurance, protection and indemnity insurance, which includes environmental damage and pollution insurance coverage and war risk insurance for its fleet. Seanergy does not expect to maintain for all of its vessels insurance against loss of hire, which covers business interruptions that result from the loss of use of a vessel. Seanergy may not be adequately insured against all risks. Seanergy may not be

able to obtain adequate insurance coverage for its fleet in the future. The insurers may not pay particular claims. Seanergy’s insurance policies may contain deductibles for which it will be responsible and limitations and exclusions which may increase its costs or lower its revenue. Moreover, insurers may default on claims they are required to pay. If Seanergy’s insurance is not enough to cover claims that may arise, the deficiency may have a material adverse effect on Seanergy’s financial condition and results of operations.

 

Seanergy and Seanergy Buyer are both incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law, which may negatively affect the ability of public shareholders to protect their interests.

 

Seanergy’s and Seanergy Buyer’s corporate affairs are governed by their respective amended and restated articles of incorporation and amended and restated by-laws and by the Marshall Islands Business Corporations Act, or BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the laws of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain U.S. jurisdictions. Shareholder rights may differ as well. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, public shareholders may have more difficulty in protecting their interests in the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction.

 

Seanergy and Seanergy Buyer are both incorporated under the laws of the Marshall Islands and their respective directors and officers are non-U.S. residents, and although you may bring an original action in the courts of the Marshall Islands or obtain a judgment against Seanergy, Seanergy Buyer or their respective directors or management based on U.S. laws in the event you believe your rights as a shareholder have been infringed, it may be difficult to enforce judgments against Seanergy, Seanergy Buyer or their respective directors or management.

 

Seanergy and Seanergy Buyer are both incorporated under the laws of the Republic of the Marshall Islands, and all of their respective assets are, and will be, located outside of the United States. Seanergy’s business will be operated primarily from its offices in Athens, Greece. In addition, Seanergy’s and Seanergy Buyer’s directors and officers, following the initial closing, will be non-residents of the United States, and all or a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against Seanergy, Seanergy Buyer or against these individuals in the United States if you believe that your rights have been infringed under securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Marshall Islands and of other jurisdictions may prevent or restrict you from enforcing a judgment against Seanergy’s or Seanergy Buyer’s assets or the assets of its respective directors and officers. Although you may bring an original action against Seanergy, Seanergy Buyer or their respective affiliates in the courts of the Marshall Islands based on U.S. laws, and the courts of the Marshall Islands may impose civil liability, including monetary damages, against Seanergy, Seanergy Buyer, or their respective affiliates for a cause of action arising under Marshall Islands laws, it may impracticable for you to do so given the geographic location of the Marshall Islands. For more information regarding the relevant laws of the Marshall Islands, please read “Enforceability of Civil Liabilities.”

 

Anti-takeover provisions in Seanergy’s and Seanergy Buyer’s respective amended and restated articles of incorporation, as well as the terms and conditions of a Voting Agreement, could make it difficult for our shareholders to replace or remove our current board of directors or could have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our common shares.

 

Several provisions of Seanergy’s and Seanergy’s Buyer’s respective amended and restated articles of incorporation and by-laws, as well as the terms and conditions of the Voting Agreement, could make it difficult for our shareholders to change the composition of our board of directors in any one year, preventing them from

changing the composition of our management. In addition, the same provisions may discourage, delay or prevent a merger or acquisition that shareholders may consider favorable.

 

These provisions include those that:

 

 

These anti-takeover provisions could substantially impede the ability of shareholders to benefit from a change in control and, as a result, may adversely affect the market price of our common shares and your ability to realize any potential change of control premium.

 

Our and Seanergy Buyer’s shipping committees are controlled by appointees of affiliates of members of the Restis’ family, which could create conflicts of interest detrimental to us.

 

Our and Seanergy Buyer’s boards of directors have created shipping committees, which have been delegated exclusive authority to consider and vote upon all matters involving shipping and vessel finance, subject to certain limitations. Affiliates of members of the Restis family have the right to appoint two of the three members of the respective shipping committees and as a result such affiliates will effectively control all decisions with respect to our shipping operations that do not involve a transaction with a Restis affiliate. Messrs. Dale Ploughman and Kostas Koutsoubelis currently serve as the Investors’ appointees to the respective shipping committees. Each of Messrs. Ploughman and Koutsoubelis also will continue to serve as officers and/or directors of other entities affiliated with members of the Restis family that operate in the dry bulk sector of the shipping industry. The dual responsibilities of members of the respective shipping committees in exercising their fiduciary duties both to us or Seanergy Buyer and other entities in the shipping industry could create conflicts of interest. Although Messrs. Ploughman and Koutsoubelis intend to maintain as confidential all information they learn from one company and not disclose it to the other; in certain instances this could be impossible given their respective roles with various companies. There can be no assurance that Messrs. Ploughman and Koutsoubelis would resolve any conflicts of interest in a manner beneficial to us.

 

U.S. Holders of our common stock may recognize gain (but not loss) for U.S. federal income tax purposes as a result of our liquidation, which would increase their U.S. federal income tax liability.

 

We expect to be treated as a partnership for U.S. federal income tax purposes through the date of our liquidation. In such case, a U.S. Holder (as such term is defined in the section entitled “Taxation — Certain U.S. Federal Income Tax Consequences”) of our common stock generally should be subject to U.S. federal income tax on such holder’s distributive share of our taxable income or gain whether or not they receive any distribution from us. As a result of our liquidation, a U.S. Holder of our common stock generally should recognize gain (but not loss) for U.S. federal income tax purposes equal to such holder’s proportionate share of the excess, if any, of the fair market value of each of our assets over our tax basis in such asset at the time of transfer of such asset to Seanergy Buyer in connection with our liquidation. Since any such gain should be determined based on the value and tax basis of such assets at the time of such transfer, the amount of such gain (and any U.S. federal income tax liability to a U.S. Holder of our common stock by reason of such gain) cannot be determined at this time. A U.S. Holder of our common stock also generally should be allocated additional gain for U.S. federal income tax purposes to the extent of such holder’s proportionate share of the excess, if any, of the aggregate liabilities assumed (or taken subject to) by Seanergy Buyer in connection with our liquidation over the aggregate tax bases of the assets transferred to Seanergy Buyer in connection with such liquidation. See the discussion in the section entitled “Taxation — Certain U.S. Federal Income Tax Consequences — Tax Consequences Prior to and as a Result of Our Liquidation — Tax Consequences to U.S. Holders of Our Common Stock and Warrants.” Shareholders and warrant holders are urged to consult with their own tax advisors on this tax issue and other tax issues in connection with our liquidation.

U.S. Holders of our warrants may have adverse U.S. federal income tax consequences as a result of our liquidation.

 

As discussed in the section of this proxy statement entitled, “Taxation — Certain U.S. Federal Income Tax Consequences — Tax Consequences Prior to and as a Result of Our Liquidation — Tax Consequences to U.S. Holders of Our Common Stock and Warrants,” in connection with our liquidation, Seanergy Buyer will assume our obligations under the warrants, and any subsequent exercise of the warrants will be for shares in Seanergy Buyer (and not for an Interest in us). While we expect that this assumption (which is provided for under the original terms of the warrants) likely should not result in a taxable event to a U.S. Holder of our warrants, each U.S. Holder should consult with its own tax advisor concerning the tax consequences of such transaction under such holder’s particular circumstances.

 

Holders of our common stock or warrants, or the common stock or warrants of Seanergy Buyer, may be subject to adverse U.S. federal income tax consequences in the event the Internal Revenue Service, or IRS, were to disagree with the U.S. federal income tax consequences described herein.

 

As described below in the section entitled “Taxation — Certain U.S. Federal Income Tax Consequences — General,” neither we nor Seanergy Buyer have sought, nor will we seek, a ruling from the IRS or an opinion of counsel as to any U.S. federal income tax consequences described herein. The IRS may disagree with the descriptions of U.S. federal income tax consequences contained herein, and its determination may be upheld by a court. Any such determination could subject a holder of our common stock or warrants or the common stock or warrants of Seanergy Buyer to adverse U.S. federal income tax consequences that would be different than those described herein. Accordingly, each such holder is urged to consult a tax advisor with respect to the specific tax consequences of the vessel acquisition and our liquidation including the applicability and effect of state, local or non-U.S. tax laws, as well as U.S. federal tax laws.

 

U.S. Holders of our common stock may have adverse U.S. federal income tax consequences if we do not liquidate in connection with the vessel acquisition.

 

If we do not obtain the requisite shareholder vote to approve the dissolution and liquidation proposal at this time, certain non-corporate U.S. Holders of our common stock generally should not benefit from the reduced rate of U.S. federal income tax of 15% on dividends received (or deemed received) from Seanergy Buyer that would otherwise be available for taxable years beginning before January 1, 2011, if we were to liquidate in connection with the vessel acquisition. In addition, if we complete the vessel acquisition but do not obtain the requisite shareholder vote to approve the dissolution and liquidation proposal at this time and we liquidate pursuant to a separate shareholder vote at a later time and, in connection therewith, our warrants are assumed by Seanergy Buyer, there is a substantial risk that, for U.S. federal income tax purposes, we generally should recognize gain or other income (and, thus, the U.S. Holders of our common stock should recognize their distributive share of such gain or other income) to the extent the liabilities assumed (or taken subject to) by Seanergy Buyer in connection with such subsequent liquidation (which may include the fair market value of our warrants at the time of such liquidation) exceed the tax basis of the assets, if any, transferred to Seanergy Buyer in connection with such liquidation.

 

Seanergy Buyer may be classified as a passive foreign investment company, or PFIC, which could result in adverse U.S. federal income tax consequences to U.S. Holders of common stock or warrants of Seanergy Buyer.

 

Seanergy Buyer generally will be treated as a PFIC for any taxable year in which either (1) at least 75% of its gross income (looking through certain corporate subsidiaries) is passive income or (2) at least 50% of the average value of its assets (looking through certain corporate subsidiaries) produce, or are held for the production of, passive income. Passive income generally includes dividends, interest, rents, royalties, and gains from the disposition of passive assets. If Seanergy Buyer were a PFIC for any taxable year during which a U.S. Holder held Seanergy Buyer’s common stock or warrants, the U.S. Holder may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements. Based on the expected composition of the assets and income of Seanergy Buyer and its subsidiaries after the vessel acquisition and our liquidation, it is not anticipated that Seanergy Buyer will be treated as a PFIC following the vessel acquisition and such liquidation. The actual PFIC

status of Seanergy Buyer for any taxable year, however, will not be determinable until after the end of its taxable year. Accordingly there can be no assurances regarding the status of Seanergy Buyer as a PFIC for the current taxable year or any future taxable year. See the discussion in the section entitled “Taxation — Certain U.S. Federal Income Tax Consequences — Tax Consequences to U.S. Holders of Owning and Disposing of Common Stock and Warrants of Seanergy Buyer — Passive Foreign Investment Company Rules.” We urge U.S. Holders to consult with their own tax advisors regarding the possible application of the PFIC rules.

 

Seanergy Buyer, or any of its vessel-owning subsidiaries, may become subject to U.S. federal income taxation on its U.S. source shipping income.

 

Each of the vessels being acquired is expected to be operated under a time charter that allows the charterer to determine the vessel’s ports of call. If a vessel operates to or from the United States, a portion of the charter income from the vessel attributable to such trips may constitute “United States source gross transportation income.” We cannot predict whether Seanergy Buyer or any of its vessel-owning subsidiaries will earn any such income. United States source gross transportation income generally is subject to U.S. federal income tax at a 4% rate, unless exempt under Section 883 of the Internal Revenue Code of 1986, as amended, or the Code. Section 883 of the Code generally provides an exemption from U.S. federal income tax in respect of gross income earned by certain foreign corporations from the international operation of ships, but only if a number of requirements are met (including requirements concerning the ownership of the foreign corporation). Because of the factual nature of determining whether this tax exemption applies, it is unclear at this time whether the exemption will be available to Seanergy Buyer or any of its vessel-owning subsidiaries for any United States source gross transportation income that they might earn. You should consult with your own tax advisors as to the risk that Seanergy Buyer or its vessel-owning subsidiaries may be subject to U.S. federal income tax.

 

Upon the dissolution and liquidation of Seanergy, as a non-U.S. company, Seanergy Buyer could elect to comply with the less stringent reporting requirements of the Exchange Act, as a foreign private issuer.

 

Seanergy Buyer is a Marshall Islands company, and its corporate affairs are governed by its amended and restated articles of incorporation, the BCA and the common law of the Marshall Islands. Upon the dissolution and liquidation of Seanergy, Seanergy Buyer intends to commence reporting under the Exchange Act as a non-U.S. company with foreign private issuer status. The principal differences between the reporting obligations of a foreign private issuer and those of a U.S. domestic company are as follows: Foreign private issuers are not required to file their annual report on Form 20-F until six months after the end of each fiscal year while U.S. domestic issuers that are accelerated filers are required to file their annual report of Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers are not required to file regular quarterly reports on Form 10-Q that contain unaudited financial and other specified information

 

However, if a foreign private issuer makes interim reports available to shareholders, the foreign private issuer will be required to submit copies of such reports to the SEC on a Form 6-K. Foreign private issuers are also not required to file current reports on Form 8-K upon the occurrence of specified significant events. However, foreign private issuers are required to file reports on Form 6-K disclosing whatever information the foreign private issuer has made or is required to make public pursuant to its home country’s laws or distributes to its shareholders and that is material to the issuer and its subsidiaries. Foreign private issuers are also exempt from the requirements under the U.S. proxy rules prescribing content of proxy statements and annual reports to shareholders. Although the American Stock Exchange, or AMEX, does require that a listed company prepare and deliver to shareholders annual reports and proxy statements in connection with all meeting of shareholders, once Seanergy Buyer commences reporting as a foreign private issuer, these documents will not be required to comply with the detailed content requirements of the SEC’s proxy regulations. Officers, directors and 10% or more shareholders of foreign private issuers are exempt from requirements to file Forms 3, 4 and 5 to report their beneficial ownership of the issuer’s common stock under Section 16(a) of the Exchange Act and are also exempt from the related short-swing profit recapture rules under Section 16(b) of the Exchange Act. Foreign private issuers are also not required to comply with the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information.

In addition, as a foreign private issuer, Seanergy Buyer may be exempted from, and you may not provided with the benefits of, some of the AMEX and Nasdaq Stock Market (if our application for listing is accepted) corporate governance requirements, including that:

 

 

As a result, Seanergy Buyer’s independent directors may not have as much influence over our corporate policy as they would if we were not a foreign private issuer.

 

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. company.

 

Investors should not rely on an investment in Seanergy if they require dividend income. It is not certain that Seanergy will pay a dividend and the only return on an investment in Seanergy may come from appreciation of the common stock.

 

Seanergy’s amended and restated articles of incorporation provides for the quarterly distribution of interest earned on the Trust Account until the earlier of the completion of a business combination, or Seanergy’s liquidation. Following the completion of the vessel acquisition Seanergy Buyer intends to pay dividends as described in “Dividend Policy of Seanergy Buyer.” However, Seanergy Buyer may incur other expenses or liabilities that would reduce or eliminate the cash available for distribution as dividends. Seanergy’s and Seanergy Buyer’s loan agreements, including the credit facility agreement that Seanergy expects to enter into, may also prohibit or restrict the declaration and payment of dividends under some circumstances.

 

In addition, the declaration and payment of dividends will be subject at all times to the discretion of Seanergy’s Buyer’s board of directors. The timing and amount of dividends will be in the discretion of Seanergy Buyer’s board of directors and be dependent on Seanergy Buyer’s earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in its loan agreements, the provisions of Marshall Islands law affecting the payment of dividends and other factors. Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividends, or if there is no surplus, dividends may be declared or paid out of net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. Seanergy Buyer may not pay dividends in the anticipated amounts and frequency set forth in this proxy statement or at all.

 

Seanergy and Seanergy Buyer are each a holding company, and will depend on the ability of their subsidiaries to distribute funds to it in order to satisfy financial obligations or to make dividend payments.

 

Seanergy and Seanergy Buyer are each a holding company and their subsidiaries, all of which are, or upon their formation will be, wholly owned by them respectively either directly or indirectly, will conduct all of Seanergy’s and Seanergy Buyer’s operations and own all of Seanergy’s and Seanergy Buyer’s operating assets. Seanergy and Seanergy Buyer will have no significant assets other than the equity interests in their wholly owned subsidiaries. As a result, Seanergy’s and Seanergy Buyer’s ability to make dividend payments depends on their subsidiaries and their ability to distribute funds to Seanergy and Seanergy Buyer. If Seanergy and Seanergy Buyer are unable to obtain funds from their subsidiaries, Seanergy’s and Seanergy Buyer’s boards of directors may exercise their discretion not to pay dividends.

Seanergy may not be able to secure its debt financing, which may affect our ability to purchase the vessels from the Sellers.

 

Seanergy’s ability to borrow amounts under its credit facility to acquire the initial fleet from the Sellers will be subject to the satisfaction of customary conditions precedent, and compliance with terms and conditions included in the loan documents, and to circumstances that may be beyond its control such as world events, economic conditions, the financial standing of the bank or its willingness to lend to shipping companies such as Seanergy. Seanergy will periodically be required, among other things, to provide the lender with acceptable valuations of the vessels in its fleet confirming that they are sufficient to satisfy minimum security requirements. To the extent that Seanergy is not able to satisfy these requirements, including as a result of a decline in the value of its vessels, Seanergy may not be able to draw down the full amount under its credit facility without obtaining a waiver or consent from the lender.

 

If the business combination is consummated, Seanergy’s warrants will become exercisable and you may experience dilution.

 

Under the terms of the Seanergy warrants, the warrants become exercisable upon the completion of a business combination transaction. If all of the proposals submitted to shareholders are approved, Seanergy expects to complete the business combination during the third quarter of 2008. Seanergy has 40,116,667 warrants to purchase common stock issued and outstanding at an exercise price of $6.50 per share including 8,008,334 private placement warrants owned by the Investors, which warrants were purchased by the Investors from our former chief executive officer and chief operating officer. As a result, if Seanergy completes the vessel acquisition, you may experience dilution.

 

Registration rights held by Seanergy’s founding shareholders and the Investors may have an adverse effect on the market price of Seanergy’s common stock.

 

Seanergy’s founding shareholders are entitled to demand that Seanergy register the resale of their shares and the shares of common stock underlying their private placement warrants at any time commencing 30 days following the completion of the vessel acquisition, even though such shares will not be released from escrow before the first year anniversary of the consummation of its initial business combination. If such shareholders exercise their registration rights with respect to all of their shares and warrants, there will be an additional 21,516,666 shares of common stock eligible for trading in the public market. We will also enter into a registration rights agreement at the initial closing with the Investors pursuant to which we have agreed to register for resale an aggregate of 10,312,500 shares held by them. The presence of these additional shares may have an adverse effect on the market price of Seanergy’s common stock.

 

The Investors hold approximately 35.37% of our outstanding common stock and the Original Founders hold approximately 9.94% of our outstanding common stock. If Seanergy Buyer achieves certain earnings targets, the Investors may elect to receive an additional 4,308,075 of our outstanding common stock within two years after closing. This may limit your ability to influence our actions.

 

The Investors own approximately 35.37% of our outstanding common stock (including 7,294,761 shares purchased on June 5, 2008, June 10, 2008, July 15, 2008, July 23, 2008 and July 24, 2008 and an additional 70,000 shares of common stock purchased by Argonaut SPC, a fund whose investment manager is an affiliate of members of the Restis family, in the open market on July 23, 2008), or approximately 27.40% of our outstanding capital stock on a fully diluted basis, assuming exercise of all outstanding warrants, but no redemptions. Assuming issuance of the earnout shares and conversion of the Note, the Investors will own approximately 47.44% of our outstanding common stock, or approximately 33.66% of our outstanding common stock on a fully diluted basis, assuming exercise of all outstanding warrants, but no redemptions. The Original Founders own approximately 9.94% of our outstanding common stock, or 15.56% of our outstanding capital stock on a fully diluted basis. In addition, we have entered into the Voting Agreement with the Investors and the Original Founders whereby the Investors and Original Founders will jointly nominate our board of directors. Collectively, the parties to the Voting Agreement will own 45.31% of our outstanding common stock, or approximately 47.88% on a fully diluted basis. Our major shareholders following the initial closing will have the power to exert considerable influence over our actions and matters which require shareholder approval, which will limit your ability to influence our actions.

Seanergy’s directors and executive officers have interests in the vessel acquisition that are different from yours.

 

In considering the recommendation of Seanergy’s directors to vote to approve the vessel acquisition proposal, you should be aware that they have agreements or arrangements that provide them with interests in the vessel acquisition proposal that differ from, or are in addition to, those of Seanergy shareholders generally. If the vessel acquisition is not approved, Seanergy will be liquidated and we will distribute to all of the holders of our shares issued in our initial public offering in proportion to their respective equity interests, an aggregate amount equal to funds on deposit in the Trust Account in which the net proceeds of Seanergy’s initial public offering are held, including any interest (net of any taxes payable) not previously released to us, plus any remaining net assets. If we fail to consummate a business combination transaction, our founding shareholders have waived their respective rights to participate in any liquidation distribution with respect to all of the founding shares and we would not distribute funds from the Trust Account with respect to Seanergy’s warrants, which would expire worthless. The personal and financial interests of the members of our board of directors and executive officers may have influenced their motivation in identifying and selecting a target business and completing a business combination in a timely manner. Consequently, their discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in Seanergy’s shareholders’ best interest.

 

Because we expect to generate all of our revenues in U.S. dollars but incur a portion of our expenses in other currencies, exchange rate fluctuations could have an adverse impact on our results of operations.

 

We expect to generate substantially all of our revenues in U.S. dollars but certain of our expenses will be incurred in currencies other than the U.S. dollar. This difference could lead to fluctuations in net income due to changes in the value of the U.S. dollar relative to these other currencies, in particular the Euro. Expenses incurred in foreign currencies against which the U.S. dollar falls in value could increase, decreasing our net income and cash flow from operations. For example, during 2007, the value of the U.S. dollar declined by approximately 10.37% as compared to the Euro and declined approximately 7.47% during the first three months of 2008.

 

As a foreign private issuer, we are exempt from SEC proxy rules, and the contents of this proxy statement may not have all of the material disclosures required under U.S. proxy rules.

 

As a foreign private issuer, we are exempt from the proxy rules promulgated under the Exchange Act which prescribe the form and content of proxy statements. Because of this exemption, we are not required to file with the SEC preliminary proxy solicitation materials regarding the vessel acquisition proposal and the dissolution and liquidation proposal. Although this proxy statement has been prepared in accordance with Marshall Islands law and has been filed with the SEC, it has not been reviewed by the SEC and may not have all of the material disclosures required under U.S. proxy rules or otherwise required by the SEC.

 

Risk Factors Relating to Seanergy as a Blank Check Company

 

Seanergy will dissolve and liquidate if it does not consummate the vessel acquisition or other business combination, in which event its shareholders may be held liable for claims by third parties against Seanergy to the extent of distributions received by them.

 

Our amended and restated articles of incorporation provide that if we have not consummated a business combination by September 28, 2009, our corporate existence will cease by operation of law. Under Marshall Islands law, shareholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. If we complied with certain procedures set forth in Section 106 of the BCA intended to ensure that we make reasonable provision for all claims against us, including a minimum six month notice period during which any third-party claims can be brought against us before any liquidating distributions are made to shareholders, any liability of a shareholder with respect to a liquidating distribution may be limited to the lesser of such shareholder’s pro rata share of the claim or the amount distributed to the shareholder, and any liability of the shareholders may be barred after the expiration of the period set forth in such notice. However, it is our intention to make liquidating distributions to our shareholders as soon as reasonably possible after dissolution and,

therefore, we do not intend to comply with those procedures. As such, our shareholders could potentially be liable for any claims to the extent of distributions received by them in a dissolution and, in such event, any such liability of our shareholders would extend beyond the dissolution proceedings. Accordingly, we cannot assure you that third parties will not seek to recover from our public shareholders amounts owed to them by us.

 

If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share liquidation price received by shareholders as part of our liquidation will be less than $10.00 per share.

 

Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we have sought, and will continue to seek, to have all third parties, including any vendors, prospective target businesses and other entities whom we engage in business, enter into agreements to waive any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public shareholders, there is no guarantee that they will execute such agreements, or even if they execute such agreements that they would be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to seek recourse against our assets, including the funds held in the Trust Account. If any third party refused to execute an agreement waiving such claims to the monies held in the Trust Account, we would perform an analysis of the alternatives available to us if we chose not to engage such third party and evaluate if such engagement would be in the best interest of our public shareholders notwithstanding the fact that such third party refused to waive such claims.

 

Examples of possible instances where we may engage a third party that refused to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a provider of required services willing to provide the waiver. In any event, our management would perform an analysis of the alternatives available to it and would only enter into an agreement with a third party that did not execute a waiver if management believed that such third party’s engagement would be in the best interest of our public shareholders.

 

There is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and not seek recourse against the Trust Account for any reason. Accordingly, the proceeds held in the Trust Account could be subject to claims that could take priority over the claims of our public shareholders and the per-share liquidation price could be less than the $10.00 per share held in the Trust Account, plus interest earned on the Trust Account not previously distributed to our public shareholders (less any taxes payable by us), due to claims of such creditors. If we are unable to complete a business combination and our corporate existence ceases, our founding shareholders will be personally liable to ensure that the proceeds in the Trust Account are not reduced by the claims of various vendors, prospective target businesses or other entities that are owed money by us for services rendered or products sold to us only if such vendor or prospective target business or other third party does not execute a valid and enforceable waiver of any rights or claims to the Trust Account. Based on representations made to us by our founding shareholders, we currently believe that founding shareholders are of substantial means and capable of funding a shortfall in our Trust Account, even though we have not asked them to reserve for such an eventuality. However, we cannot assure you that our founding shareholders will be able to satisfy those obligations. We believe the likelihood of our founding shareholders having to indemnify the Trust Account is limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us pursuant to which they waive any right, title, interest or claim of any kind in or to the monies held in the Trust Account. In the event that following our liquidation it is subsequently determined that the reserve for claims and liabilities is insufficient, shareholders who received a return of funds from our Trust Account as part of its liquidation could be liable to creditors for such amounts.

 

Additionally, if we are forced to file a bankruptcy case, or an involuntary bankruptcy case is filed against us which is not dismissed, the funds held in our Trust Account will be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our

shareholders. To the extent any bankruptcy claims deplete the Trust Account, we cannot assure you that we will be able to return to our public shareholders the liquidation amounts due to them.

 

Industry Risk Factors Relating to Seanergy

 

The dry bulk shipping industry is cyclical and volatile, and this may lead to reductions and volatility of charter rates, vessel values and results of operations.

 

The degree of charter hire rate volatility among different types of dry bulk carriers has varied widely. If Seanergy enters into a charter when charter hire rates are low, its revenues and earnings will be adversely affected. In addition, a decline in charter hire rates likely will cause the value of the vessels that Seanergy will own, to decline and Seanergy may not be able to successfully charter its vessels in the future at rates sufficient to allow it to operate its business profitably or meet its obligations. The factors affecting the supply and demand for dry bulk carriers are outside of Seanergy’s control and are unpredictable. The nature, timing, direction and degree of changes in dry bulk shipping market conditions are also unpredictable.

 

Factors that influence demand for seaborne transportation of cargo include:

 

 

The factors that influence the supply of vessel capacity include:

 

 

Seanergy anticipates that the future demand for its vessels will be dependent upon continued economic growth in the world’s economies, including China and India, seasonal and regional changes in demand, changes in the capacity of the world’s dry bulk carrier fleet and the sources and supply of cargo to be transported by sea. If the global vessel capacity increases in the dry bulk shipping market, but the demand for vessel capacity in this market does not increase or increases at a slower rate, the charter rates could materially decline. Adverse economic, political, social or other developments could have a material adverse effect on our business, financial condition, results of operations and ability to pay dividends.

 

Charter rates in the dry bulk shipping market are at historically high levels and future growth will depend on continued economic growth in the world economy that exceeds growth in vessel capacity. A reduction in world economic growth may have an adverse effect on Seanergy’s financial condition and results of operations.

 

Charter rates for the dry bulk carriers recently have been at historically high levels. Seanergy anticipates that future demand for its vessels, and in turn future charter rates, will be dependent upon continued economic growth in the world’s economy, particularly in China and India, as well as seasonal and regional changes in demand and changes in the capacity of the world’s fleet. The world’s dry bulk carrier fleet is expected to increase in 2007 as a

result of substantial scheduled deliveries of newly constructed vessels and low forecasts for scrapping of existing vessels. Continued economic growth in the world economy that exceeds growth in vessel capacity will be necessary to sustain current charter rates. There can be no assurance that economic growth will not decline or that vessel scrapping will occur at an even lower rate than forecasted. A decline in charter rates could have a material adverse effect on Seanergy’s business, financial condition and results of operations. To the extent that our decision to proceed with the vessel acquisition or Axiom Capital Management Inc.’s, or Axiom’s, opinion as to the fairness of the transaction is predicated on continued growth, such decision may prove to be a bad one if such growth does not occur and charter rates drop.

 

An oversupply of dry bulk carrier capacity may lead to reductions in charter rates and our profitability.

 

The market supply of dry bulk carriers, primarily Capesize and Panamax vessels, has been increasing, and the number of such dry bulk carriers on order is near historic highs. Newly constructed vessels were delivered and are expected to continue in significant numbers starting at the beginning of 2006 through 2009. As of December 2007, newly constructed vessels orders had been placed for an aggregate of more than 60% of the current global dry bulk fleet, with deliveries expected during the next four to five years. An oversupply of dry bulk carrier capacity may result in a reduction of our charter rates. If such a reduction occurs, when our vessels’ current charters expire or terminate, we may only be able to recharter our vessels at reduced or unprofitable rates or we may not be able to charter these vessels at all.

 

Changes in the economic and political environment in China and policies adopted by the government to regulate its economy may have a material adverse effect on our business, financial condition and results of operations.

 

The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, or OECD, in such respects as structure, government involvement, level of development, growth rate, capital reinvestment, allocation of resources, rate of inflation and balance of payments position. Prior to 1978, the Chinese economy was a planned economy. Since 1978, increasing emphasis has been placed on the utilization of market forces in the development of the Chinese economy. There is an increasing level of freedom and autonomy in areas such as allocation of resources, production, pricing and management and a gradual shift in emphasis to a “market economy” and enterprise reform. Although limited price reforms were undertaken, with the result that prices for certain commodities are principally determined by market forces, many of the reforms are experimental and may be subject to change or abolition. We cannot assure you that the Chinese government will continue to pursue a policy of economic reform. The level of imports to and exports from China could be adversely affected by changes to these economic reforms, as well as by changes in political, economic and social conditions or other relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions, all of which could, adversely affect our business, financial condition and operating results.

 

An economic slowdown in the Asia Pacific region could have a material adverse effect on Seanergy’s business, financial position and results of operations.

 

A significant number of the port calls made by Seanergy’s vessels may involve the loading or discharging of raw materials and semi-finished products in ports in the Asia Pacific region. As a result, a negative change in economic conditions in any Asia Pacific country, but particularly in China or India, may have an adverse effect on Seanergy’s future business, financial position and results of operations, as well as its future prospects. In particular, in recent years, China has been one of the world’s fastest growing economies in terms of gross domestic product. Seanergy cannot assure you that such growth will be sustained or that the Chinese economy will not experience contraction in the future. Moreover, any slowdown in the economies of the United States, the European Union or certain Asian countries may adversely effect economic growth in China and elsewhere. Seanergy’s business, financial position and results of operations, as well as its future prospects, will likely be materially and adversely affected by an economic downturn in any of these countries.

Seanergy may become dependent on spot charters in the volatile shipping markets which may have an adverse impact on stable cash flows and revenues.

 

Seanergy may employ one or more of its vessels on spot charters, including when time charters on vessels expire. The spot charter market is highly competitive and rates within this market are subject to volatile fluctuations, while longer-term period time charters provide income at pre-determined rates over more extended periods of time. If Seanergy decides to spot charter its vessels, there can be no assurance that Seanergy will be successful in keeping all its vessels fully employed in these short-term markets or that future spot rates will be sufficient to enable its vessels to be operated profitably. A significant decrease in charter rates could affect the value of Seanergy’s fleet and could adversely affect its profitability and cash flows with the result that its ability to pay debt service to its lenders and dividends to its shareholders could be impaired.

 

Seanergy’s operating results will be subject to seasonal fluctuations, which could affect its operating results and the amount of available cash with which Seanergy can pay dividends.

 

Seanergy will operate its vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter hire rates. This seasonality may result in volatility in its operating results, which could affect the amount of dividends that Seanergy pays to its shareholders from period to period. The dry bulk carrier market is typically stronger in the fall and winter months in anticipation of increased consumption of coal and other raw materials in the northern hemisphere during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. As a result, revenues of dry bulk carrier operators in general have historically been weaker during the fiscal quarters ended June 30 and September 30, and, conversely, been stronger in fiscal quarters ended December 31 and March 31. This seasonality may materially affect Seanergy’s operating results and cash available for dividends.

 

Seanergy will be subject to regulation and liability under environmental laws that could require significant expenditures and affect its cash flows and net income.

 

Seanergy’s business and the operation of its vessels will be materially affected by government regulation in the form of international conventions, national, state and local laws and regulations in force in the jurisdictions in which its vessels operate, as well as in the country or countries of their registration. Because such conventions, laws, and regulations are often revised, Seanergy cannot predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale prices or useful lives of its vessels. Additional conventions, laws and regulations may be adopted which could limit Seanergy’s ability to do business or increase the cost of its doing business and which may materially and adversely affect its operations. Seanergy will be required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to its operations.

 

The operation of Seanergy’s vessels is affected by the requirements set forth in the United Nations’ International Maritime Organization’s International Management Code for the Safe Operation of Ships and Pollution Prevention, or ISM Code. The ISM Code requires vessel owners, vessel managers and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The failure of a vessel owner or bareboat charterer to comply with the ISM Code may subject it to increased liability, may invalidate existing insurance or decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports. Each of Seanergy’s vessels will be ISM code-certified but we cannot assure that such certificate will be maintained indefinitely.

 

Seanergy expects to maintain, for each of its vessels, pollution liability coverage insurance in the amount of $1 billion per incident. If the damages from a catastrophic incident exceeded Seanergy’s insurance coverage, it could have a material adverse effect on Seanergy’s financial condition and results of operations.

The operation of dry bulk carriers has particular operational risks which could affect our earnings and cash flow.

 

The operation of certain vessel types, such as dry bulk carriers, has certain particular risks. With a dry bulk carrier, the cargo itself and its interaction with the vessel can be an operational risk. By their nature, dry bulk cargoes are often heavy, dense, easily shifted, and react badly to water exposure. In addition, dry bulk carriers are often subjected to battering treatment during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold) and small bulldozers. This treatment may cause damage to the vessel. Vessels damaged due to treatment during unloading procedures may be more susceptible to breach while at sea. Hull breaches in dry bulk carriers may lead to the flooding of the vessels’ holds. If a dry bulk carrier suffers flooding in its forward holds, the bulk cargo may become so dense and waterlogged that its pressure may buckle the vessel’s bulkheads leading to the loss of a vessel. If Seanergy is unable to adequately maintain its vessels, it may be unable to prevent these events. Any of these circumstances or events could result in loss of life, vessel and/or cargo and negatively impact Seanergy’s business, financial condition, results of operations and ability to pay dividends. In addition, the loss of any of its vessels could harm Seanergy’s reputation as a safe and reliable vessel owner and operator.

 

If any of Seanergy’s vessels fails to maintain its class certification and/or fails any annual survey, intermediate survey, drydocking or special survey, it could have a material adverse impact on Seanergy’s financial condition and results of operations.

 

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the International Convention for the Safety of Life at Sea, or SOLAS. Seanergy’s vessels are expected to be classed with one or more classification societies that are members of the International Association of Classification Societies.

 

A vessel must undergo annual surveys, intermediate surveys, drydockings and special surveys. In lieu of a special survey, a vessel’s machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Seanergy’s vessels are expected to be on special survey cycles for hull inspection and continuous survey cycles for machinery inspection. Every vessel will also be required to be drydocked every two to three years for inspection of the underwater parts of such vessels.

 

Currently, the African Zebra and the Hamburg Max are scheduled to be drydocked in February 2009. The costs of such drydockings are expected to aggregate between $2.0 million and $2.1 million.

 

If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, drydocking or special survey, the vessel will be unable to carry cargo between ports and will be unemployable and uninsurable. Any such inability to carry cargo or be employed, or any such violation of covenants, could have a material adverse impact on Seanergy’s financial condition and results of operations.

 

Because our seafaring employees are covered by industry-wide collective bargaining agreements, failure of industry groups to renew those agreements may disrupt our operations and adversely affect our earnings.

 

We expect that our vessel-owning subsidiaries will employ a large number of seafarers. All of the seafarers employed on the vessels in our fleet are covered by industry-wide collective bargaining agreements that set basic standards. We cannot assure you that these agreements will prevent labor interruptions. Any labor interruptions could disrupt our operations and harm our financial performance.

 

Maritime claimants could arrest Seanergy’s vessels, which could interrupt its cash flow.

 

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel through foreclosure proceedings. The arresting or attachment of one or more of Seanergy’s vessels could interrupt its cash flow and require it to pay large sums of funds to have the arrest lifted which would have a material adverse effect on Seanergy’s financial condition and results of operations. In

addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel which is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert “sister ship” liability against one of Seanergy’s vessels for claims relating to another of its vessels.

 

Governments could requisition Seanergy’s vessels during a period of war or emergency, resulting in loss of earnings.

 

A government could requisition for title or seize Seanergy’s vessels. Requisition for title occurs when a government takes control of a vessel and becomes the owner. Also, a government could requisition Seanergy’s vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Government requisition of one or more of Seanergy’s vessels could have a material adverse effect on Seanergy’s financial condition and results of operations.

 

Because Seanergy will operate its vessels worldwide, terrorism and other events outside Seanergy’s control may negatively affect its operations and financial condition.

 

Because Seanergy will operate its vessels worldwide, terrorist attacks such as the attacks on the United States on September 11, 2001, the bombings in Spain on March 11, 2004 and in London on July 7, 2005, and the continuing response of the United States to these attacks, as well as the threat of future terrorist attacks, continue to cause uncertainty in the world financial markets and may affect Seanergy’s business, results of operations and financial condition. The continuing conflict in Iraq may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. These uncertainties could also have a material adverse effect on Seanergy’s ability to obtain additional financing on terms acceptable to it or at all. In the past, political conflicts have also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea and off the coast of Somalia. Any of these occurrences could have a material adverse impact on our operating results, revenues and costs.

 

Terrorist attacks and armed conflicts may also negatively affect Seanergy’s operations and financial condition and directly impact its vessels or its customers. Future terrorist attacks could result in increased volatility of the financial markets in the United States and globally and could result in an economic recession in the United States or the world. Any of these occurrences could have a material adverse impact on Seanergy’s financial condition.

 

Our net income may be subject to fluctuation due to change in the value of the U.S. dollar relative to other currencies.

 

Seanergy will generate all its revenue in U.S. dollars but Seanergy will incur certain vessel operating and general and administrative expenses in currencies other than the U.S. dollar. This difference could lead to fluctuations in net income due to changes in the value of the U.S. dollar relative to other currencies. Expenses incurred in foreign currencies against which the U.S. dollar falls in value can increase, which would result in a decrease in Seanergy’s net income.

 

We believe that some of the information in this proxy statement constitutes forward-looking statements. You can identify these statements by forward-looking words such as “may,” “expect,” “anticipate,” “contemplate,” “believe,” “estimate,” “intend,” and “continue” or similar words. You should read statements that contain these words carefully because they:

 

 

Seanergy believes it is important to communicate its expectations to its shareholders. However, there may be events in the future that Seanergy is not able to accurately predict or over which Seanergy has no control. The risk

factors and cautionary language discussed in this proxy statement provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by Seanergy in its forward-looking statements, including among other things:

 

 

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement.

 

All forward-looking statements included herein attributable to Seanergy or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, Seanergy undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement or to reflect the occurrence of unanticipated events.

 

Before you grant your proxy or instruct how your vote should be cast or vote on the approval of the vessel acquisition and dissolution and liquidation you should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement could have a material adverse effect on Seanergy upon completion of the vessel acquisition and dissolution and liquidation.

 

The Seanergy Special Meeting

 

Seanergy is furnishing this proxy statement to you as part of the solicitation of proxies by the Seanergy board of directors for use at the special meeting in connection with the proposed vessel acquisition and dissolution and liquidation. This proxy statement provides you with the information you need to be able to vote or instruct your vote to be cast at the special meeting.

 

Date, Time and Place

 

The special meeting will be held at 10:00 a.m., Eastern Standard Time, on August 14, 2008, at the offices of Loeb & Loeb LLP, 345 Park Avenue, New York, New York 10154.

 

Purpose of the Special Meeting

 

At the special meeting, the holders of Seanergy common stock are being asked to:

 

 

 

Seanergy’s board of directors:

 

 

Record Date; Who is Entitled to Vote

 

The record date for the special meeting is July 25, 2008. Record holders of Seanergy common stock at the close of business on the record date are entitled to vote or have their votes cast at the special meeting. On the record date, there were 28,600,000 issued and outstanding shares of Seanergy common stock.

 

Each share of Seanergy common stock is entitled to one vote at the special meeting.

 

The founding shareholders have agreed to vote: (i) all of the founding shares in the same way as the majority of the shares of common stock voted by the public shareholders with respect to the vessel acquisition proposal and (ii) all of the shares of Seanergy common stock they acquired or may acquire in or after our IPO in favor of the vessel acquisition proposal. The public shareholders are free to vote their shares as they see fit.

 

The quorum for the special meeting is the presence, in person or by proxy, of holders of a majority of the issued and outstanding shares of Seanergy common stock. A quorum is the minimum number of issued and outstanding shares of Seanergy common stock, the holders of which must be present at a special meeting in order to duly convene the meeting. Shares held by shareholders who are present in person at the meeting but who do not vote or who mark their proxy cards to show abstentions, and shares represented by broker non-votes, are included for purposes of determining the presence of a quorum.

 

Seanergy’s issued and outstanding warrants do not have voting rights and holders of Seanergy warrants will not be entitled to vote at the special meeting.

Seanergy Shares

 

The units (and the shares of Seanergy common stock included in the units) issued in our initial public offering were available initially only in book-entry form and are currently represented by one or more global certificates, which were deposited with, or on behalf of DTC, and registered in its name or in the name of its nominee. Accordingly, all of the public shares are held in “street name.”

 

Voting Your Shares

 

Your proxy card shows the number of shares of Seanergy common stock that you own.

 

There are two ways to vote your shares of Seanergy common stock at the special meeting:

 

 

Who Can Answer Your Questions About Voting Your Shares

 

If you have any questions about how to vote or direct a vote in respect of your Seanergy common stock, you may call +30-210-7206900 Attn: Ioannis Tsigkounakis, or +30-210-3726200 Attn: Alexios Komninos.

 

In addition, we have retained the proxy soliciting firm of Morrow & Co., LLC to assist in the solicitation of proxies and provide related advice and informational support. If you have any questions or need assistance in voting your shares, please contact Morrow & Co., LLC, toll free at 1-800-662-5200; banks and brokers may also call 1-800-662-5200.

 

No Additional Matters May Be Presented at the Special Meeting

 

This special meeting has been called only to consider Proposal 1 and Proposal 2. Under Seanergy’s by-laws, other than procedural matters incident to the conduct of the special meeting, no other matters may be considered at the special meeting.

 

Changing Your Vote or Revoking Your Proxy

 

You may change your vote by ensuring that the bank, broker, or other nominee who is the record owner of your shares sends a later-dated, signed proxy card reflecting your changed instructions to Alexios Komninos at Seanergy, but such later-dated proxy must be received by Seanergy no later than 5:00 P.M., New York City time, on August 13, 2008 (the business day prior to the date of the special meeting of Seanergy shareholders).

 

You also may revoke your vote by ensuring that the bank, broker, or other nominee who is the record owner of your shares sends a notice of revocation to Alexios Komninos at Seanergy, but such later-dated proxy must be received by Seanergy no later than 5:00 P.M., New York City time, on August 13, 2008 (the business day prior to the date of the special meeting of Seanergy shareholders).

 

You may also change your vote or revoke your proxy by obtaining a proxy from the record holder of your shares authorizing you to vote your shares or revoke your proxy, attending the special meeting and requesting a ballot and voting at the special meeting or requesting return of your proxy, as applicable.

Vote Required

 

The vessel acquisition will be approved if: (a) provided there is a quorum, holders of at least a majority of the shares of Seanergy’s common stock cast at the special meeting vote in favor of the vessel acquisition proposal; and (b) the holders of less than 35% of Seanergy’s common stock issued in its initial public offering (or 8,084,999 shares of common stock) both vote against the vessel acquisition proposal and properly exercise their redemption rights. If shareholders approve the vessel acquisition proposal but do not approve the dissolution and liquidation proposal, the vessel acquisition will proceed.

 

The dissolution and liquidation proposal will be approved if the holders of at least two-thirds of Seanergy’s outstanding common stock entitled to vote in person or by proxy at the meeting vote in favor of the dissolution and liquidation proposal. Notwithstanding approval of the dissolution and liquidation, Seanergy will not consummate the dissolution and liquidation unless the vessel acquisition is also approved. Each of the dissolution and liquidation proposal and vessel acquisition proposal will be voted on separately.

 

Abstentions and Broker Non-Votes

 

An abstention or the failure to instruct your broker how to vote (also known as a broker non-vote) is not considered a vote cast at special the meeting with respect to the vessel acquisition proposal and therefore your vote will have no effect on the vote relating to the vessel acquisition. Failure to vote will not have the effect of redeeming your shares into a pro rata portion of the Trust Account.

 

An abstention or broker non-vote, since it is not an affirmative vote in favor of a respective proposal but adds to the number of shares present in person or by proxy, will have the same effect as a vote against the dissolution and liquidation proposal.

 

Redemption Rights

 

Pursuant to Seanergy’s amended and restated articles of incorporation, Seanergy’s public shareholders have the right to vote against the vessel acquisition proposal and demand that Seanergy redeem all (and not less than all) of their public shares for cash at the redemption price of $10.00 per share. If you properly exercise your redemption rights, then you will be irrevocably exchanging your shares of common stock for cash and will no longer own those shares of common stock. You may only demand that Seanergy redeem your shares by checking the box on the proxy card and, at the same time, ensuring that your bank or broker complies with the requirements described elsewhere herein. You will only be entitled to receive cash for those shares if you continue to hold those shares through the initial closing date of the vessel acquisition.

 

If you redeem your shares of common stock, you will still have the right to exercise any warrants you own in accordance with their terms.

 

If the vessel acquisition is not completed, then your shares will not be redeemed at this time, even if you so demand. The acquisition will not be completed if public shareholders owning more than approximately 34.99% of the public shares (or 8,084,999 shares of common stock) both vote against the vessel acquisition proposal and properly exercise their redemption rights.

 

Prior to exercising redemption rights, Seanergy shareholders should verify the market price of Seanergy’s common stock, as they may receive higher proceeds from the sale of their shares in the public market than from exercising their redemption rights. The closing price of Seanergy’s common stock on July 24, 2008, was $9.87 per share.

 

Redemption Procedures

 

If you wish to exercise your redemption rights, you must:

 

 

 

Your bank or broker must, by 5:00 P.M., New York City time, on August 13, 2008, the business day prior to the special meeting, electronically transfer your shares to the DTC account of Continental Stock Transfer & Trust Company, our stock transfer agent, and provide Continental Stock Transfer & Trust Company with the necessary stock powers, written instructions that you want to redeem your shares and a written certificate addressed to Continental Stock Transfer & Trust Company stating that you were the owner of such shares as of the record date, you have owned such shares since the record date and you will continue to own such shares through the initial closing of the acquisition. If your bank or broker does not provide each of these documents to Continental Stock Transfer & Trust Company, 17 Battery Place, New York, NY 10004, attn: Mark Zimkind, tel. 212-845-3287, fax 212-616-7616 by 5:00 p.m., New York City time, on August 13, 2008, the business day prior to the special meeting, your shares will not be redeemed.

 

If you demand redemption of your shares, and later decide that you do not want to redeem such shares, your bank or broker must make arrangements with Continental Stock Transfers & Trust Company, at the telephone number stated above, to withdraw the redemption. To be effective, withdrawals of shares previously submitted for redemption must be completed prior to the commencement of the special meeting.

 

Continental Stock Transfer & Trust Company can assist with this process. We urge shareholders who may wish to exercise their redemption rights to promptly contact the account executive at the organization holding their account to accomplish these additional procedures. If such shareholders fail to act promptly, they may be unable to timely satisfy the redemption requirements.

 

Any action that does not include a vote against the vessel acquisition proposal will prevent you from exercising your redemption rights.

 

Solicitation Costs

 

Seanergy is soliciting proxies on behalf of the Seanergy board of directors, and Seanergy will pay all costs of preparing, assembling and mailing the proxy materials. This solicitation is being made by mail. Seanergy and its directors and officers may also solicit proxies in person, by telephone, by fax or by other electronic means and, in the event of such solicitations, the information provided will be consistent with this proxy statement and enclosed proxy card. These persons will not receive any additional compensation for these services. Seanergy will ask banks, brokers and nominees to forward its proxy materials to their beneficial owners and to obtain their authority to execute proxies and voting instructions. Seanergy will reimburse them for their reasonable expenses. We have retained the proxy-soliciting firm of Morrow & Co., LLC to assist in the solicitation of proxies and provide related advice and informational support, at a cost of approximately $15,000.

 

Stock Ownership

 

There are 28,600,000 outstanding shares of Seanergy common stock. The founding shareholders own an aggregate of approximately 44.98% of the outstanding shares. All of these shareholders have agreed to vote: (i) all of the founding shares in the same way as the majority of the shares of common stock voted by the public shareholders with respect to the vessel acquisition proposal and (ii) any shares of Seanergy common stock they acquired or may acquire in or after our IPO in favor of the vessel acquisition proposal. The public shareholders are free to vote their shares as they see fit.

 

The following table sets forth information, as of July 25, 2008, regarding the beneficial ownership of shares of common stock, by each person known by us to own beneficially 5% or more of our outstanding common stock, each of our directors and officers, and all of our officers and directors as a group.

Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.

 

 

 

 

 

The discussion in this proxy statement of the vessel acquisition and the principal terms of the Master Agreement and each MOA is subject to, and is qualified in its entirety by reference to, the Master Agreement and the applicable MOA. A copy of the Master Agreement and each MOA is attached as an annex to this proxy statement and is incorporated in this proxy statement by this reference.

 

General Description of the Vessel Acquisition

 

Pursuant to the Master Agreement and the several MOAs, Seanergy Buyer, through its vessel-owning subsidiaries, has agreed to purchase, for an aggregate purchase price of (i) $367,030,750 in cash, (ii) $28,250,000 in the form of a convertible promissory note, and (iii) up to 4,308,075 shares of Seanergy Buyer common stock (subject to Seanergy Buyer meeting certain earnings based thresholds as defined in the Master Agreement), six dry bulk carriers, including a newly built vessel and one vessel currently under construction, from companies associated with members of the Restis family. This fleet of dry bulk carriers includes two Panamax, two Supramax and two Handysize dry bulk carriers. All six vessels entered into time charters with South African Marine Corporation, an affiliate of members of the Restis family and one of the oldest shipping names in Africa. These dry

bulk carriers transport a variety of dry bulk cargoes such as coal, iron ore and grain. The vessels have a combined cargo-carrying capacity of 317,743 deadweight tons and an average fleet age of approximately 10.5 years. One of the two Supramax dry bulk carriers is newly built and one is under construction and scheduled for delivery in 2008.

 

On the initial closing date, title to, and delivery of, such number of vessels, together with contract rights to purchase vessels, whose aggregate fair market value will equal at least 80% of the amount in the Trust Account (excluding deferred underwriting discounts and commissions in the amount of $5,362,500), will be transferred and effectuated by the Seller of each such vessel to Seanergy Buyer’s respective vessel-owning subsidiary in accordance with the terms and conditions of each MOA relating to each such vessel, such that Seanergy’s initial business combination (as defined in its prospectus with respect to its initial public offering) may be consummated. In addition, on the initial closing date, Seanergy Buyer will deposit an amount equal to 20% of the balance of the aggregate cash purchase price for the vessels not yet delivered in a joint interest-bearing account, with the balance of the cash purchase price for each vessel to be paid against delivery of such vessel in accordance with the terms and conditions of the MOA governing each such vessel.

 

The remaining vessels that are currently trading are to be delivered as soon as possible after the initial closing, their then-current itineraries permitting. The ownership and possession of the vessel that is currently under construction will be transferred and delivered to Seanergy Buyer’s respective vessel-owning subsidiary simultaneously with the delivery of that vessel from the shipyard to the relevant Seller, or on the initial closing date, if delivery can be made as of such date. All warranties applicable to such vessels will be assigned by each such Seller to Seanergy Buyer’s respective vessel-owning subsidiary.

 

Each of the Sellers is a single vessel-owning entity, a customary form of vessel ownership in the shipping industry, that is controlled by members of the Athens-based Restis family: Valdis Marine Corp., a Marshall Islands company, Goldie Navigation Ltd., a Marshall Islands company, Kalistos Maritime S.A., a Marshall Islands company, Kalithea Maritime S.A., a Marshall Islands company, Pavey Services Ltd., a British Virgin Islands company, and Shoreline Universal Limited, a British Virgin Islands company.

 

The Restis family has been engaged in the international shipping industry for more than 40 years, including the ownership and operation of more than 60 vessels in various segments of the shipping industry, including cargo and chartering interests. The separate businesses controlled by members of the Restis family, when taken together, comprise one of the largest independent shipowning and management groups in the dry bulk sector of the shipping industry. Through our separate agreements with affiliates of members of the Restis family in respect of the management and the chartering of the vessels in our initial fleet upon their delivery to us, we expect to benefit from their extensive industry experience and established relationships. We believe that Safbulk, the Restis family affiliate that will act as our commercial broker, has achieved a strong reputation in the international shipping industry for efficiency and reliability that should create new employment opportunities for us with a variety of well known charterers.

 

Background of the Acquisition

 

Seanergy is a blank check company formed specifically for the purpose of acquiring, through a merger, capital stock exchange, vessel acquisition, stock purchase or other similar business combination, vessels or one or more operating businesses in the shipping industry, whose fair market value is equal to at least 80% of the amount in our Trust Account (excluding deferred underwriting discounts and commissions in the amount of $5,362,500).

 

The terms of the vessel acquisition proposal is the result of arm’s length negotiations between representatives of Seanergy and members of the Restis family. The following is a discussion of the background of the selection and negotiation of the vessel acquisition proposal, and Seanergy’s efforts to identify potential candidates for a business combination.

 

On February 7, 2008, Georgios Koutsolioustos and Alexios Komninos, president and chief financial officer, respectively, of Seanergy, met with Victor Restis to discuss business opportunities related to Seanergy. Mr. Restis expressed interest in Seanergy and proposed a possible transaction involving the sale of a fleet of newly constructed vessels and second hand vessels to Seanergy for a combination of cash, equity and debt.

Mr. Koutsolioutsos indicated to Mr. Restis that such business opportunity might be suitable for Seanergy and asked for specifications of the proposed fleet from Mr. Restis.

 

Companies controlled by members of the Restis family manage, own and operate a considerable number of vessels and have an extensive number of newly constructed vessels on order. Accordingly, the initial fleet proposed for evaluation by Mr. Restis consisted of seven vessels, including three Panamax, two Handysize and two Supramax vessels. Following discussions between the parties, the list was revised several times before concluding on the composition of the current fleet.

 

On March 10, 2008, Georgios Koutsolioutsos, Alexios Komninos, Ioannis Tsigkounakis, Seanergy’s secretary, and Panagiotis Zafet, Seanergy’s former chief executive officer and co-chairman of the board of directors, met to review and discuss the opportunity, prepare the relevant financial models and assess whether the transaction was suitable for Seanergy. This meeting was not a board meeting, but an internal meeting to discuss and assess the opportunity.

 

From mid March 2008 to early April 2008, representatives from the Restis family and Seanergy exchanged information regarding the proposed fleet and other aspects of the proposed transaction.

 

Over numerous extensive meetings during April 2008, representatives from the Restis family and Seanergy met to develop the potential transaction structure. Further discussions were held during which financial models were also developed and analyzed.

 

On May 7, 2008, Victor Restis contacted Panagiotis Zafet regarding purchasing the founding shares and private placement warrants from both Panagiotis and Simon Zafet and causing representatives of members of the Restis family to replace the Zafets as insiders of Seanergy. Mr. Restis agreed to this condition, Mr. Restis and the Zafets then agreed upon a purchase price and the Zafets retained counsel separate from the Company to negotiate the transaction on their behalf. On May 20, 2008, the Zafets and the Investors enacted and closed upon the stock purchase transaction. (See “Certain Relationships and Related Party Transactions — Stock Purchase Agreement”)

 

On May 20, 2008, a special meeting of the board of directors of Seanergy was held to approve the vessel acquisition. A draft of the Axiom fairness opinion was delivered to the board of directors on May 19, 2008 prior to the special meeting of the board of directors. In addition, representatives of Axiom made a presentation at the special meeting of the board of directors with regard to the analysis undertaken by Axiom, as well as an overview of comparable transactions, various models and other factors that were taken into consideration in reaching its opinion with regard to the vessel acquisition. Axiom advised the board that it was of the opinion that the vessel acquisition is fair to Seanergy and its shareholders from a financial point of view and that the vessels have a fair market value of at least 80% of the amount in the Trust Account (excluding deferred underwriting discounts and commissions in the amount of $5,362,500). After the presentation by representatives of Axiom, the board of directors approved the vessel acquisition subject to the receipt of the executed fairness opinion confirming Axiom’s oral advice. The written opinion was received shortly after the special meeting. Concurrently, the board of directors of Seanergy Buyer approved the vessel acquisition.

 

From April 10, 2008 to May 15, 2008, the parties negotiated a number of commercial documents relating to the transaction, including the Master Agreement, the MOAs for the six dry bulk carriers, including a newly built vessel and one vessel currently under construction, the Management Agreement and the Brokerage Agreement, among others, culminating in the execution of such definitive agreements on May 20, 2008.

 

On May 26, 2008, as contemplated in the Master Agreement and each of the MOAs, Seanergy Buyers’s vessel-owning subsidiaries joined the Master Agreement, pursuant to those certain Acknowledgement and Agreements included as Annex S-1 through S-6, and assumed the rights and obligations of Seanergy under the several MOAs, pursuant to those certain Agreements included as Annex T-1 through T-6.

 

Prior to entering into the Master Agreement, Seanergy considered three other potential business combination transactions, excluding the vessel acquisition being proposed to our shareholders. These candidates were in various sectors of the shipping industry, including panamax tankers, container vessels and dry bulk carriers. All of the prospective business combinations were accorded serious consideration by Seanergy’s executive officers; two of the

transactions were rejected prior to reaching an agreement in principle because the transaction size was insufficient due to the potential sellers’ unwillingness to include a sufficient number of vessels in the sale.

 

Seanergy agreed to the substantive terms of a business combination with one of the potential candidates. In connection therewith, Seanergy entered into a non-binding letter of intent on February 18, 2008 with Paradise Tankers Corp./Heidmar Inc., mixed fleet companies, for the acquisition of five Panamax tankers and two Panamax bulk carriers and commenced due diligence, which included reviewing the charter party agreements for the vessels, reviewing class records and physically inspecting a number of vessels through an independent surveyor. The letter of intent was subsequently terminated on May 8, 2008 due to the decision of sellers not to sell due to market conditions.

 

The management of Seanergy decided to enter into the Master Agreement and the MOAs because it concluded that the vessel acquisition, unlike the other three transactions it had considered, was in the best interests of Seanergy and its shareholders. In particular, Seanergy believes that the dry bulk sector of the shipping industry currently provides the most attractive opportunities for a business combination due to anticipated continued demand from China and India that we expect to keep dry bulk shipping rates at historically high levels. Seanergy also believes that the Sellers and Investors are reputable vessel owners and operators in this highly fragmented sector. Management also believes that, not only is the fleet to be purchased well diversified in terms of age, size and type of vessel, but the vessels in the fleet are subject to charter parties that have been secured on favorable market terms. Finally, because the Investors (which are parties related to the Sellers), through their affiliates, will commercially manage the vessels, and because their affiliates will also charter the vessels, they will have a vested interest in the performance of the fleet and Seanergy as a whole. Management believes that, through our separate agreements with affiliates of members of the Restis family in respect of the management and the chartering of all of the six vessels in our initial fleet upon their delivery to us, Seanergy will benefit from the Restis family’s extensive industry experience and established relationships.

 

It should be noted that Georgios Koutsolioutsos, Alexios Komninos and Ioannis Tsigkounakis, on behalf of Seanergy and Seanergy Buyer, and Dale Ploughman, as a representative of the Restis family, were some, but not all, of the individuals who were responsible for negotiating the terms of the definitive agreements on behalf of each respective party, and each such individual has since execution of such agreements assumed a position with, and is receiving compensation from, Seanergy and Seanergy Buyer and will continue in such positions if the vessel acquisition is approved: Dale Ploughman was appointed and will continue as a member of Seanergy’s and Seanergy Buyer’s boards of directors and as Seanergy’s and Seanergy Buyer’s chief executive officer; Georgios Koutsolioutsos resigned as co-chairman of Seanergy’s and Seanergy Buyer’s boards of directors and president and was appointed and will continue as sole chairman of Seanergy’s and Seanergy Buyer’s boards of directors; Alexios Komninos will continue to serve as Seanergy’s and Seanergy Buyer’s chief financial officer; Ioannis Tsigkounakis will continue to serve as Seanergy’s and Seanergy Buyer’s secretary; and Kostas Koutsoubelis was appointed and will continue as a member of Seanergy’s and Seanergy Buyer’s boards of directors.

 

The compensation for Seanergy’s and Seanergy Buyer’s officers and directors will be determined after the vessel acquisition.

 

Advisors

 

Seanergy engaged the following advisors to assist management in identifying, evaluating, structuring and marketing transactions with potential targets.

 

Seanergy has retained Maxim Group LLC, or Maxim, pursuant to the professional services agreement, dated April 9, 2008 (the “Professional Services Agreement”), as amended, to provide advisory services in connection with the acquisition by Seanergy of one or more businesses in the shipping industry and/or other related industries. Maxim shall be entitled to a success fee equal to $2,000,000, payable on the initial closing. Seanergy has agreed to reimburse Maxim for all reasonable out of pocket expenses, subject to a maximum of $100,000, and to indemnify and hold Maxim for harmless for any losses suffered by Maxim in connection with its obligations under the Professional Services Agreement.

On July 18, 2008, Seanergy entered into an advisory services agreement (the “Advisory Services Agreement”) with Rodman & Renshaw, LLC, or Rodman, pursuant to which Rodman will provide Seanergy with advisory services in connection with its business combination. Rodman shall be entitled to a success fee equal to $2,000,000. Seanergy has agreed to indemnify and hold Rodman harmless for any losses suffered by Rodman in connection with its obligations under the Advisory Services Agreement.

 

Seanergy has also entered into a finder’s agreement with an unaffiliated party, pursuant to which Seanergy has agreed to pay such party a finder’s fee of 0.5% of the total consideration paid in connection with the vessel acquisition.

 

Interests of Seanergy’s Directors and Officers in the Vessel Acquisition

 

When you consider the recommendation of Seanergy’s board of directors that you vote in favor of the vessel acquisition proposal, you should keep in mind that certain of Seanergy’s directors and officers have interests in the acquisition that are different from, or in addition to, your interests as a shareholder. See the section entitled, “Certain Relationships and Related Party Transactions.”

 

Our founding shareholders, three of whom serve on our board of directions, own shares of our common stock which will be released from escrow only if a business combination is successfully completed and own warrants which will expire worthless if a business combination is not consummated. In addition, Messrs. Dale Ploughman and Kostas Koutsoubelis have each been appointed to serve on our board of directors by the Investors. The Investors also beneficially own shares of common stock which will be released from escrow only if a business combination is successfully completed and warrants which will expire worthless if a business combination is not consummated, all of which were purchased for $25,000,000 from two of our former officers and directors. Because each of Messrs. Ploughman and Koutsoubelis was appointed by the Investors, and are employed by affiliates of the Investors in other ship-owning ventures, the Investors are in a position to exert influence over such individuals in their capacities as directors of Seanergy. Accordingly, these board members may have certain financial motivations to consummate a business combination and may have a conflict of interest in determining whether a particular target acquisition is appropriate to effect a business combination.

 

Under Marshall Islands law, each of these individuals has a fiduciary duty to us, and not to any of our other shareholders or affiliates, in acting as our officer and/or director. These fiduciary duties include the duty of loyalty, which requires that an officer or director must exercise his or her powers in good faith in the best interests of the corporation he or she serves and not in the director’s or officer’s own interest or in the interest of another person or an organization with which the officer or director is associated.

 

Seanergy’s Reasons for the Vessel Acquisition and Recommendation of Seanergy’s Board of Directors

 

Seanergy’s board of directors has concluded that the vessel acquisition is in the best interests of Seanergy and its shareholders and that the vessel acquisition is fair, from a financial point of view, to Seanergy’s shareholders. The Seanergy board of directors also concluded that the fair market value of the number of vessels to be delivered at the initial closing together with the contract rights to purchase the remaining vessels is equal to at least 80% of Seanergy’s net assets (excluding deferred underwriting discounts and commissions in the amount of $5,362,500) at the time of the execution of the definitive agreements for the vessel acquisition and that all other conditions to the consummation of the business combination set forth in the prospectus for Seanergy’s initial public offering have been met. The total consideration for the vessel acquisition is (i) $367,030,750 in cash, (ii) $28,250,000 in the form of a convertible promissory note, and (iii) up to 4,308,075 shares of Seanergy Buyer common stock (subject to Seanergy Buyer meeting certain earnings based thresholds as defined in the Master Agreement). Eighty percent of Seanergy’s net assets, as of March 31, 2008 (excluding deferred underwriting discounts and commissions in the amount of $5,362,500) is approximately $182,947,000.

 

In addition, Axiom, rendered its opinion to Seanergy’s board of directors that, as of the date of its opinion, and based on conditions that existed as of that date, upon and subject to the considerations described in its opinion and based upon such other matters as it considered relevant, the vessel acquisition is fair to Seanergy and its shareholders from a financial point of view and that the number of vessels to be delivered at the initial closing together with the contract rights to purchase the remaining vessels have a fair market value of at least 80% of the

amount in the Trust Account (excluding deferred underwriting discounts and commissions in the amount of $5,362,500). It should be noted that Axiom utilized forecasts provided by our management, which assume three vessels are delivered at the initial closing and are immediately chartered out and two vessels are delivered within 60 days after the initial closing. The projections assume strong future growth in revenues and an improvement in EBITDA in line with the additional vessels being delivered over the next 60 days. The full text of the Axiom fairness opinion, dated as of May 14, 2008, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached hereto as Annex L.

 

Members of our management team have extensive experience in the shipping industry, and in the dry bulk sector of the shipping industry, in particular. Seanergy believes that the dry bulk sector of the shipping industry currently provides the most attractive opportunities for a business combination, and that the Sellers are reputable vessel owners and operators in this highly fragmented sector. Management also believes that, not only is the fleet to be purchased well diversified in terms of age, size and type of vessel, but the vessels in the fleet are subject to charter parties that have been secured on favorable market terms. Finally, because the Sellers, through their affiliates, will manage the vessels and are significant shareholders in Seanergy, they will have a vested interest in the performance of the fleet and Seanergy as a whole.

 

The board of directors also relied on due diligence reviews and analyses of the dry bulk carriers performed by various independent professionals, including financial, legal, accounting and other consultants retained for such purpose. Seanergy engaged an independent third party shipping and technical expert, who performed due diligence on the vessels. The consultants were paid primarily based on the amount of time spent on the engagement and were reimbursed reasonable out of pocket expenses. As part of the financing of the transaction, Seanergy and certain financial institutions and their legal advisors performed additional due diligence as required to obtain financing commitments. The financial institutions financing the transaction and their legal advisors will be paid at, or shortly after, closing of the transaction upon funding.

 

Seanergy conducted a due diligence review of the dry bulk carriers and the Sellers that included a review, among other things, of the Seller’s charter documents and corporate minutes and the vessels’ records of the relevant classification society. All second hand vessels have been physically inspected, and Seanergy has the right to conduct a divers’ inspection at the port of delivery prior to each second hand vessels’ delivery to Seanergy. Finally, we have reviewed the specification plans, general arrangement plans and other documentation relating to the newly constructed vessels.

 

Seanergy’s board of directors considered a wide variety of factors in connection with its evaluation and recommendation to approve the Master Agreement, the several MOAs and the other definitive agreements. The board relied on an analysis or review of various factors, including, but not limited to, the following:

 

 

 

Seanergy’s board of directors also considered potential risks relating to the vessel acquisition, including the following:

 

 

For further potential risks relating to the vessel acquisition, see the section entitled “Risk Factors” beginning on page 21.

 

Acquisition Financing

 

Seanergy intends to fund a portion of the aggregate purchase price of the six dry bulk carriers, including a newly built vessel and one vessel currently under construction, with (i) the cash in the Trust Account, net of the deferred underwriting compensation and estimated expenses of approximately $14.7 million for legal and accounting services, the fairness opinion and other services and (ii) debt financing in a maximum principal amount of $255,000,000, which debt will be secured by the vessels that will be acquired as part of the vessel acquisition. Seanergy intends to borrow an amount sufficient to fund the balance of the cash portion of the aggregate purchase price of the vessels to be delivered at the initial closing and the vessels to be delivered at subsequent closings to the extent that funds in the Trust Account are insufficient to do so. Following the acquisition of the six vessels, Seanergy expects to have working capital of approximately $7.8 million. Any excess funds that may still be available under any credit facility will be used to provide working capital. See the section entitled, “The Acquisition Financing.”

 

Vote Required

 

Under Seanergy’s amended and restated articles of incorporation, approval of the vessel acquisition proposal requires the affirmative vote of the holders of a majority of the shares of common stock cast at the special meeting, provided that there is a quorum. Seanergy’s founding shareholders have agreed to vote 5,500,000 of their shares, representing approximately 19.23% of the issued and outstanding shares of common stock, in accordance with the holders of a majority of the public shares voting in person or by proxy at the meeting. In addition, holders of the founding shares have agreed to vote any shares of Seanergy common stock they acquired or may acquire in the future in favor of the vessel acquisition proposal. Accordingly, Mr. Koutsolioutsos will be voting 92,680 shares of our common stock purchased on July 25, 2008, as to which he has sole voting power, and the Investors will be voting 7,294,761 shares of our common stock purchased on June 5, 2008, June 10, 2008, July 15, 2008, July 23, 2008 and July 24, 2008, as to which the Investors have sole voting power, in favor of the vessel acquisition proposal. If the shareholders approve the vessel acquisition proposal, the vessel acquisition will only proceed if holders of shares sold in Seanergy’s initial public offering representing less than 35% of the shares sold in the initial public offering exercise their redemption rights at the time of casting a vote against the vessel acquisition proposal. If the holders of 8,085,000 or more shares sold in Seanergy’s initial public offering (which number represents 35% of the shares of common stock sold in Seanergy’s IPO) vote against the vessel acquisition proposal and demand that Seanergy redeem their shares for their pro rata portion of the Trust Account established at the time of the initial public offering, Seanergy will not be permitted to consummate the vessel acquisition pursuant to its amended and restated articles of incorporation. If shareholders approve the vessel acquisition proposal but do not approve the dissolution and liquidation proposal, the vessel acquisition will proceed.

An abstention or the failure to instruct your broker how to vote (also known as a broker non-vote) is not considered a vote cast at the meeting with respect to the vessel acquisition proposal and therefore your vote will have no effect on the vote relating to the vessel acquisition. Failure to vote will not have the effect of redeeming your shares into a pro rata portion of the Trust Account, and you will not be able to redeem your shares.

 

Recommendation

 

After careful consideration of the terms and conditions of the proposed vessel acquisition, the board of directors of Seanergy has determined that the vessel acquisition and the transactions contemplated thereby are in the best interests of Seanergy and its shareholders and that the vessel acquisition is fair, from a financial point of view, to its shareholders. See the section entitled, “Fairness Opinion.” Seanergy’s board of directors recommends that you vote or give instructions to vote “FOR” the vessel acquisition proposal.

 

The foregoing discussion of the information and factors considered by the Seanergy board of directors is not meant to be exhaustive, but includes the material information and factors considered by Seanergy’s board of directors.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE
VESSEL ACQUISITION PROPOSAL.

 

The summary of the material terms of the Master Agreement, the MOAs, the Management Agreement and the Brokerage Agreement appearing below and elsewhere in this proxy statement is subject to the terms and conditions of all such agreements, forms of which are attached to this proxy statement as Annex A through Annex G. This summary may not contain all of the information about the Master Agreement, the MOAs, the Management Agreement and the Brokerage Agreement that is important to you. We encourage you to read carefully all such agreements in their entirety.

 

The Master Agreement; The Six Memoranda of Agreement or MOAs

 

Purchase Price and Delivery of the Six Vessels

 

Pursuant to the MOAs, Seanergy Buyer through the vessel-owning subsidiaries will acquire six vessels (two Handysize, two Panamax and two Supramax dry bulk carriers), including one newly built vessel and one vessel that is currently under construction, from the Sellers for an aggregate purchase price of (i) $367,030,750 in cash, (ii) $28,250,000 in the form of a convertible promissory note, and (iii) up to 4,308,075 shares of Seanergy Buyer common stock (subject to Seanergy Buyer meeting certain earnings based thresholds). On the initial closing date of the vessel acquisition, Seanergy Buyer will deposit, in separate joint interest-bearing accounts, an amount representing a deposit of 20% of the aggregate purchase price, with the balance of the purchase price for each vessel to be paid against delivery of such vessel. The sale and delivery of each of the six dry bulk carriers, including a newly built vessel and one vessel currently under construction, is governed by the terms and conditions of a standard Memorandum of Agreement approved by the Baltic and International Maritime Council, or BIMCO, under code name NORWEGIAN SALEFORM 1993, as further negotiated by the parties.

 

On the initial closing date, title to, and delivery of, such number of vessels, together with contract rights to purchase vessels, whose aggregate fair market value is equal at least to 80% of the amount in the Trust Account (excluding deferred underwriting discounts and commissions in the amount of $5,362,500), will be transferred and effectuated by the Seller of each applicable vessel to Seanergy in accordance with the terms and conditions of each MOA relating to each such vessel. The balance of the second hand vessels are to be delivered as soon as possible after the initial closing date in accordance with the terms and conditions of each MOA relating to each such vessel, each having a canceling date 60 days after the initial closing date. The ownership and possession of the vessel that is currently under construction will be transferred and delivered to Seanergy Buyer’s respective vessel-owning subsidiary as soon as reasonably possible with the delivery of that vessel from the shipyard to the relevant Seller. The Master Agreement and the MOAs shall automatically terminate if the shareholder’s meeting associated with

this proxy statement has not occurred by August 14, 2008, or such later date as the Sellers may, from time to time, specify by notice in writing to Seanergy and Seanergy Buyer.

 

Seanergy Buyer’s vessel-owning subsidiaries and SAMC, an affiliate of the Sellers and members of the Restis family, entered into time charter parties for all vessels. Each charter party shall commence as of the delivery of each vessel to Seanergy Buyer’s vessel-owning subsidiaries to which such charter party relates.

 

The table below provides summary information about the six dry bulk carriers:

 

 

 

 

The Sellers have a fixed legal obligation under the MOAs to deliver the vessels to Seanergy Buyer’s vessel-owning subsidiaries. The inability of the Sellers to deliver a vessel under an MOA would arise only in rare circumstances, for example, if the vessel becomes an actual, constructive or compromised total loss. In such circumstance, if a Seller does not deliver a vessel, the terms of the MOA provide that the deposit (inclusive of the interest) would be returned to Seanergy Buyer and the MOA would become null and void. In the event that a Seller fails to deliver a vessel for any other reason, Seanergy may take legal action against such Seller seeking damages for the Seller’s breach of its obligations under the MOA.

 

The parties have agreed to other matters related generally to the performance of their duties under the Master Agreement, including, without limitation, our obligation to file this proxy statement and obtain the approval of our shareholders, the parties’ requirement to maintain the confidentiality of each other party’s information disclosed during due diligence and negotiations and the parties using their commercially reasonable efforts to satisfy or cause to be satisfied all of the covenants, agreements and conditions set forth in the Master Agreement.

 

Other Conditions and Agreements

 

Seanergy Buyer’s relevant vessel-owning subsidiaries entered into time charter parties for all vessels with SAMC, a company associated with members of the Restis family. Each charter party reflects rates for a one-year period from delivery of the applicable vessel as follows (inclusive of a total of 3.75% address and charter

commission in favor of parties nominated by the Sellers): (i) $30,000 per day for the African Oryx; (ii) $36,000 per day for the African Zebra; (iii) $60,000 per day for the Davakis G. (ex. Hull No. KA215); (iv) $60,000 per day for the Hull No. KA216; (v) $65,000 per day for the Bremen Max and (vi) $65,000 per day for the Hamburg Max, with some flexibility permitted with regard to the per vessel type charters secured by the Sellers so long as the operating day and duration weighted average revenues are consistent with the foregoing.

 

The Master Agreement also provides that we will enter into the Management Agreement with EST for the management of our fleet of vessels, and the Brokerage Agreement with Safbulk for the commercial brokerage of the fleet, each as more fully set forth in the Master Agreement. Both EST and Safbulk are affiliated with one or more members of the Restis family.

 

In addition, the parties have agreed that, from and after the initial closing, both our board of directors and that of Seanergy Buyer shall consist of 13 directors, who shall be nominated, appointed and/or elected in accordance with the terms of the Voting Agreement described below. Notwithstanding this requirement, the boards of directors shall only consist of seven directors until the earlier of September 30, 2008 or the approval of the vessel acquisition by our shareholders.

 

Closing Conditions

 

The consummation of the transactions contemplated by the Master Agreement are conditioned upon the following: (i) delivery by each party to such other party of a certificate to the effect that the representations and warranties of each party are true and correct in all material respects as of the applicable closing date; (ii) delivery by each party to such other party of a certificate to the effect that all covenants contained in the Master Agreement have been materially complied with by each party, or waived, prior to or on the applicable closing date; (iii) no legal or governmental action, suit or proceeding shall have been instituted or threatened before any court, administrative agency or tribunal, and no order, judgment or decree shall have been issued or proposed to be issued by any court, administrative agency or tribunal setting aside, restraining, enjoining or preventing the consummation of the Master Agreement or the transactions contemplated thereby or that has, had, or would reasonably be expected to have, a material adverse effect on the Master Agreement or the transactions contemplated thereby; (iv) SAMC has entered into charter parties with each applicable vessel-owning subsidiary of Seanergy Buyer in accordance with the terms of the Master Agreement; and (v) the execution by and delivery to each party of each of the various closing deliveries required therein.

 

We cannot complete the vessel acquisition unless (i) a majority of the shares of our common stock voted by the public shareholders are voted in favor of the vessel acquisition, and (iii) public shareholders owning less than 35% of the shares sold in our initial public offering exercise their redemption rights. If the vessel acquisition is not approved by the requisite vote of our shareholders and/or, public shareholders owning more than 35% of the shares sold in our initial public offering exercise their redemption rights and do not vote in favor of this transaction, the vessel acquisition will be deemed cancelled and of no further force and effect, with no further action required on the part of the parties.

 

Finally, the obligations of the Sellers and the Investors to consummate the transactions contemplated by the Master Agreement, in addition to the obligations enumerated above, are conditioned upon the following: (i) from the date of the Master Agreement until the initial closing date, there shall have been no change, event or development that has had, or would reasonably be expected to have, a material adverse effect on us or Seanergy Buyer; (ii) the Management Agreement has been executed and delivered by the Managing Subsidiary (as defined in the Master Agreement) and EST; (iii) the Brokerage Agreement has been executed and delivered by the Managing Subsidiary and Safbulk; and (iv) each of Seanergy Buyer’s applicable vessel-owning subsidiaries shall have become parties to each of the Management and Brokerage Agreements.

 

Representations and Warranties

 

The Master Agreement contains representations and warranties of each of us and the Sellers, as applicable, that are customary for transactions of this type, relating to, among other things, proper corporate organization and similar corporate matters; due authorization, performance and enforceability of the Master Agreement; the

requirement to obtain, or provide, any prior governmental approval or notice; and the absence of litigation relating to the parties’ ability to enter into or to consummate their obligations under the Master Agreement.

 

Termination

 

The Master Agreement may be terminated as follows: (i) by mutual written consent of us and Seanergy Buyer and a majority of the Sellers and the Investors; (ii) by the Sellers, if the proxy statement to be delivered to Seanergy shareholders is not mailed to Seanergy’s shareholders within 10 business days from the date Seanergy received the financial information of the Sellers required to be in the proxy statement; or (iii) by the Sellers, if the shareholders meeting to which this proxy statement relates has not occurred by August 14, 2008, or such later date as the Sellers may, from time to time, specify by notice in writing to Seanergy and Seanergy Buyer. In the event of any such termination, all of the parties’ obligations thereunder shall terminate (except for certain obligations enumerated therein), however, the parties shall not be relieved from liability for the breach of any of their respective representations, warranties, covenants or agreements set forth in the Master Agreement.

 

Expenses

 

Under the Master Agreement, each of Seanergy, Seanergy Buyer and each Seller are responsible for its own expenses in connection with the preparation, negotiation, execution and delivery of the MOAs and the Master Agreement.

 

Governing Law; Dispute Resolution

 

Each of the MOAs is governed by and construed under the laws of England without regard to conflicts of laws principles. The Master Agreement is governed by and construed under the laws of New York without regard to conflicts of laws principles. Any dispute under the Master Agreement or the MOAs will be referred to London arbitration.

 

Management of the Fleet

 

Seanergy will outsource the management and commercial brokerage of its fleet to affiliates of members of the Restis family. The commercial brokerage of Seanergy’s fleet has been contracted out to Safbulk and the management of its fleet has been contracted out to EST.

 

Brokerage Agreement

 

Under the terms of the Brokerage Agreement entered into by Safbulk, as exclusive commercial broker, with Seanergy Management Corp., Safbulk will provide commercial brokerage services to Seanergy’s subsidiaries, which include, among other things, seeking and negotiating employment for the vessels owned by the vessel-owning subsidiaries in accordance with the instructions of Seanergy Management Corp., a wholly owned subsidiary of Seanergy Buyer that oversees the provision of certain services to the Seanergy group of vessel-owning subsidiaries. Safbulk will be entitled to receive a commission of 1.25% calculated on the collected gross hire/freight/demurrage payable when such amounts are collected. The Brokerage Agreement is for a term of two years, and is automatically renewable for consecutive periods of one year, unless either party is provided with three months’ written notice prior to the termination of such period.

 

Safbulk, the Sellers and the Investors are affiliates of members of the Restis family. The Restis family has been engaged in the international shipping industry for more than 40 years, including the ownership and operation of more than 60 vessels in various segments of the shipping industry, including cargo and chartering interests. The separate businesses controlled by members of the Restis family, when taken together, comprise one of the largest independent shipowning and management groups in the dry bulk sector of the shipping industry. Through our separate agreements with affiliates of members of the Restis family in respect of the management and chartering of the vessels in our initial fleet upon their delivery to us, we expect to benefit from their extensive industry experience and established relationships. We believe that Safbulk has achieved a strong reputation in the international shipping industry for efficiency and reliability that should create new employment opportunities for us with a variety of well known charterers.

Under the terms of the Master Agreement, the Sellers agreed to procure charters for all of the six vessels in Seanergy’s initial fleet. All of such vessels will be chartered to SAMC, an affiliate of members of the Restis family.

 

Prospectively, Seanergy intends to employ its vessels under time charters and in the spot market. A vessel trading in the spot market may be employed under a voyage charter or a time charter of short duration, generally less than three months. A time charter is a contract to charter a vessel for an agreed period of time at a set daily rate. A voyage charter is a contract to carry a specific cargo for a per ton carry amount. Under voyage charters, Seanergy would pay voyage expenses such as port, canal and fuel costs. Under time charters, the charterer pays these voyage expenses. Under both types of charters, Seanergy will pay for vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs. Seanergy will also be responsible for each vessel’s intermediate drydocking and special survey costs. Alternatively, vessels can be chartered under “bareboat” contracts whereby the charterer is responsible for the vessel’s maintenance and operations, as well as all voyage expenses.

 

Vessels operating on time charter provide more predictable cash flows, but can yield lower profit margins, than vessels operating in the spot market during periods characterized by favorable market conditions. Vessels operating in the spot market generate revenues that are less predictable but may enable Seanergy to increase profit margins during periods of increasing dry bulk rates. However, Seanergy would then be exposed to the risk of declining dry bulk rates, which may be higher or lower than the rates at which Seanergy chartered its vessels. Seanergy will constantly evaluate opportunities for time charters, but only expects to enter into additional time charters if it can obtain contract terms that satisfy its criteria.

 

Management Agreement

 

Under the terms of the Management Agreement entered into by EST, as manager of all vessels to be owned by Seanergy’s subsidiaries, with Seanergy Management Corp., EST will perform certain duties that will include general administrative and support services necessary for the operation and employment of all vessels to be owned by all subsidiaries of Seanergy, including, without limitation, crewing and other technical management, insurance, freight management, accounting related to vessels, provisions, bunkering, operation and, subject to Seanergy’s instructions, sale and purchase of vessels.

 

Under the terms of the Management Agreement, EST will be entitled to receive a daily fee of Euro 416.00 per vessel until December 21, 2008, which fee may thereafter be increased annually by an amount equal to the percentage change during the preceding period in the Harmonised Indices of Consumer Prices All Items for Greece published by Eurostat from time to time. Such fee is payable monthly in advance, with the first payment due on the initial closing date. All subsequent payments shall be due on the first business day of each following month.

 

EST is also an affiliate of members of the Restis family. EST has been in business for over 34 years and manages approximately 95 vessels (inclusive of new vessel build supervision), including the fleet of vessels of affiliates of member of the Restis family. As with Safbulk, we believe that EST has achieved a strong reputation in the international shipping industry for efficiency and reliability and has achieved economies of scale that should result in the cost effective operation of our vessels.

 

The Management Agreement is for a term of two years, and is automatically renewable for consecutive periods of one year, unless either party is provided with three months’ written notice prior to the termination of such period.

 

Shipping Committee

 

We have established, and caused our wholly owned subsidiary, Seanergy Buyer, to establish, a shipping committee. The purpose of each shipping committee is to consider and vote upon all matters involving shipping and vessel finance. The shipping industry often demands very prompt review and decision-making with respect to business opportunities. In recognition of this, and in order to best utilize the experience and skills that the Restis family board appointees bring to us, each of our board of directors and Seanergy Buyer’s board of directors has delegated all such matters to the respective shipping committees. Transactions that involve the issuance of our securities or transactions that involve a related party, however, shall not be delegated to the shipping committees but instead shall be considered by the entire applicable board of directors. Each shipping committee is comprised of

three directors. In accordance with the Voting Agreement, the Master Agreement and the by-laws of Seanergy Buyer, two of the directors are appointed by the Investors and one of the directors is appointed by the Original Founders. The initial members of both shipping committees are Messrs. Dale Ploughman and Kostas Koutsoubelis, who are the Investors appointees, and Mr. Elias M. Culucundis, who is the Original Founders appointee. Any vacancies on the shipping committees will be filled by the party that made the appointment of the person whose resignation or removal caused the vacancy.

 

The Charters

 

Seanergy Buyer’s relevant vessel-owning subsidiaries entered into time charter parties for all vessels with SAMC, a company associated with members of the Restis family. Each charter party reflects rates for a one-year period from delivery of the applicable vessel as follows (inclusive of a total of 3.75% address and charter commission in favor of parties nominated by the Sellers): (i) $30,000 per day for the African Oryx; (ii) $36,000 per day for the African Zebra; (iii) $60,000 per day for the Davakis G. (ex. Hull No. KA215); (iv) $60,000 per day for the Hull No. KA216; (v) $65,000 per day for the Bremen Max and (vi) $65,000 per day for the Hamburg Max, with some flexibility permitted with regard to the per vessel type charters secured by the Sellers so long as the operating day and duration weighted average revenues are consistent with the foregoing.

 

EST, Safbulk and SAMC, are each affiliates of members of the Restis family.

 

Background

 

As originally contemplated at the time of our initial public offering, we formed Seanergy Buyer to transfer all or substantially all of our assets to, following which we will dissolve and liquidate. We are seeking your approval of the proposed plan of dissolution and liquidation of Seanergy in the form set forth in Annex R to this proxy statement, which is contingent upon the completion of the vessel acquisition. As a result of the dissolution and liquidation, we will distribute to each holder of shares of common stock of Seanergy, one share of common stock of Seanergy Buyer for each share of Seanergy common stock at such time as a registration statement filed with the SEC under the Securities Act or an Information Statement under Section 14(a) of the Exchange Act by Seanergy Buyer relating to the dissolution and liquidation is declared effective. All outstanding warrants of Seanergy will concurrently become obligations of Seanergy Buyer and become exerciseable to purchase Seanergy Buyer common stock.

 

In connection with the dissolution and liquidation we will (i) adopt the plan of dissolution and liquidation; (ii) pay or adequately provide for the payment of our liabilities; (iii) file Articles of Dissolution with the Registrar of Corporations of the Marshall Islands in accordance with Marshall Islands law; and (iv) distribute to each holder of shares of common stock of Seanergy one share of common stock of Seanergy Buyer for each share of Seanergy common stock held by such holder. All outstanding warrants of Seanergy will concurrently become obligations of Seanergy Buyer and become exerciseable to purchase Seanergy Buyer common stock. We expect to file the Articles of Dissolution with the Registrar of Corporations of the Marshall Islands, and accordingly, distribute to our shareholders shares of common stock of Seanergy Buyer at such time as a registration statement filed with the SEC under the Securities Act or an Information Statement under Section 14(a) of the Exchange Act by Seanergy Buyer is declared effective. The dissolution and liquidation proposal is conditioned upon and subject to the approval of the vessel acquisition proposal.

 

Proposal

 

Summary of the Plan of Dissolution and Liquidation

 

The following describes briefly the material terms of the proposed plan of dissolution and liquidation of Seanergy. This summary is provided to assist shareholders in reviewing this proxy statement and considering the proposed dissolution and liquidation, but does not include all of the information contained in the proxy statement and may not contain all of the information that is important to you. To understand fully the dissolution and

liquidation being submitted for shareholder approval, you should carefully read this proxy statement, including the accompanying copy of the plan of dissolution and liquidation attached as Annex R , in its entirety.

 

Seanergy is seeking your approval for the dissolution and liquidation of Seanergy and of the plan of dissolution and liquidation. After careful consideration of all relevant factors, Seanergy’s board of directors has unanimously determined that the dissolution and liquidation of Seanergy is fair to, and in the best interest of, Seanergy and its shareholders. The board of directors has unanimously approved Seanergy’s dissolution and liquidation, declared it advisable and directed that it be submitted for shareholder action. The board of directors has also approved the plan of dissolution and liquidation and directed that it be submitted for shareholder action. We expect to file the Articles of Dissolution with the Registrar of Corporations of the Marshall Islands, and accordingly, distribute to our shareholders shares of common stock of Seanergy Buyer at such time as a registration statement filed with the SEC under the Securities Act or on Information Statement under Section 14(a) of the Exchange Act by Seanergy Buyer is declared effective. A copy of the plan of dissolution and liquidation is attached as Annex R to this proxy statement. After approval of Seanergy’s plan of dissolution and liquidation, we anticipate that our activities will be limited to actions we deem necessary or appropriate to accomplish, inter alia, the following:

 

 

Under Marshall Islands law, shareholders will not have dissenters’ appraisal rights in connection with the dissolution and liquidation.

 

We will discontinue recording transfers of shares of our common stock on the date of Seanergy’s dissolution, although we believe that any trades of our common stock held in “street” name will be tracked and marked with a due bill by the Depository Trust Company. Thereafter, certificates representing shares of our common stock will not be assignable or transferable on our books, except by will, intestate succession or operation of law. After that date, we will not issue any new share certificates, except in connection with such transfers or as replacement certificates.

 

Our Conduct Following Approval of the Dissolution and Liquidation

 

Our directors and officers will not receive any compensation for the duties that each performs in connection with Seanergy’s dissolution and liquidation under the plan of dissolution and liquidation. Following approval of Seanergy’s dissolution and liquidation by our shareholders at the special meeting, our activities will be limited to adopting the plan of dissolution and liquidation, winding up our affairs, taking such actions as we believe may be necessary, appropriate or desirable to preserve the value of our assets, and distributing our assets in accordance with the plan of dissolution and liquidation.

 

Following dissolution, although they do not expect to do so, our board of directors may, at any time, engage third parties to complete the liquidation pursuant to the plan of dissolution and liquidation.

 

We will indemnify our officers, directors and agents in accordance with our amended and restated articles of incorporation and amended and restated by-laws for actions taken in connection with winding up our affairs. Our

obligation to indemnify such persons may be satisfied out of our remaining assets, which are minimal. The board of directors may obtain and maintain such insurance as they believe may be appropriate to cover our indemnification obligations under the plan of dissolution and liquidation. The board of directors has determined to continue to maintain directors’ and officers’ liability insurance following the dissolution of Seanergy.

 

Share Certificates

 

Shareholders should not forward their share certificates before receiving instructions to do so. After such instructions are sent, shareholders of record must surrender their share certificates to receive distributions of shares of Seanergy Buyer. If a share certificate has been lost, stolen or destroyed, the holder may be required to furnish us with satisfactory evidence of the loss, theft or destruction, together with a surety bond or other indemnity, as a condition to the receipt of any distribution.

 

Required Vote

 

The dissolution and liquidation proposal will be approved if the holders of at least two-thirds of Seanergy’s outstanding common stock entitled to vote in person or by proxy at the meeting vote in favor of the dissolution and liquidation proposal. Notwithstanding approval of the dissolution and liquidation, Seanergy will not consummate the dissolution and liquidation unless the vessel acquisition is also approved. If shareholders approve the vessel acquisition proposal but do not approve the dissolution and liquidation proposal, the vessel acquisition will in any event proceed. Each of the dissolution and liquidation proposal and vessel acquisition proposal will be voted on separately.

 

An abstention or the failure to instruct your broker how to vote (also known as a broker non-vote), since it is not an affirmative vote in favor of a respective proposal but adds to the number of shares present in person or by proxy, will have the same effect as a vote against the dissolution and liquidation proposal. Failure to vote will not have the effect of redeeming your shares into a pro rata portion of the Trust Account.

 

The dissolution and liquidation proposal is conditioned upon and subject to the approval of the vessel acquisition proposal.

 

Recommendation

 

The board of directors believes that it is in the best interests of Seanergy that the shareholders approve the proposal to authorize the dissolution and liquidation.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF SEANERGY VOTE “FOR”’ THIS PROPOSAL 2 TO AUTHORIZE THE DISSOLUTION AND LIQUIDATION OF SEANERGY.

 

Acquisition Financing

 

Seanergy intends to fund a portion of the aggregate purchase price of the six dry bulk carriers, including a newly built vessel and one vessel currently under construction, to be acquired in the vessel acquisition with (i) the cash in the Trust Account, net of the deferred underwriting compensation and estimated expenses of approximately $14.7 million for legal and accounting services, the fairness opinion and other services, (ii) the Note in the principal amount of $28,250,000 and (iii) up to a maximum of $255,000,000 from the debt financing, assuming that the maximum number of public shareholders exercise their redemption rights. Following the acquisition of the six vessels, Seanergy expects to have working capital of approximately $7.8 million. Any excess funds that may still be available under any credit facility will be used for additional vessel acquisitions and to provide working capital.

 

Debt Financing

 

On June 6, 2008, Seanergy Buyer’s vessel-owning subsidiaries, as borrowers, and Seanergy and Seanergy Buyer, as guarantors, entered into a committed term sheet with Marfin Egnatia Bank S.A., whereby the latter,

subject to the approval of the vessel acquisition proposal and the dissolution and liquidation proposal and certain other conditions, will arrange two credit facilities to Seanergy of up to $255,000,000. The credit facilities consist of (i) a term loan facility in the amount of $165,000,000 to fund 42% of the cash portion of the purchase price of the vessel acquisition and (ii) a revolving credit facility of up to $90,000,000 for investment and working capital purposes, including the acquisition of up to 8,085,000 Seanergy shares owned by public shareholders who elect to exercise their redemption rights. The credit facilities are to be secured by, among other things, a first priority mortgage on each of the six dry bulk carriers to be acquired in the vessel acquisition, and drawdowns under such facilities are not to exceed 70% of the aggregate value of all collateral.

 

The term loan facility will be available for six drawdowns, one drawdown on delivery of each of the six vessels, not later than January 30, 2009, as follows: (i) $18,500,000 for the African Oryx vessel; (ii) $14,000,000 for the African Zebra vessel; (iii) $36,850,000 for the Davakis G. (ex. Hull No. KA215) vessel; (iv) $36,850,000 for the Hull No. KA216 vessel; (v) $28,800,000 for the Bremen Max vessel; and (vi) $30,000,000 for the Hamburg Max vessel. The term loan facility is to be repaid in 28 consecutive quarterly principal installments commencing on the earlier of (A) three months from the last drawdown, and (B) March 31, 2009 with the first four installments equaling $7,500,000 each, the second four installments equaling $5,250,000 each and the next 20 installments equaling $3,200,000 each, with the last installment to be accompanied by a balloon payment in the amount of $50,000,000. The term loan facility will bear interest at the rate of LIBOR plus a margin of 1.50% subject to increase to 1.75% in the event the ratio of total assets to total liabilities is below 165%, which ratio will be tested quarterly.

 

The revolving credit facility will be available for up to $90,000,000 in drawings of up to $30,000,000 each, for investment and working capital purposes, including the acquisition of up to 8,085,000 Seanergy shares owned by public shareholders who elect to exercise their redemption rights. The available revolving credit facility shall be reduced annually commencing one year from signing final documentation for the facility with a payment in the amount of $18,000,000 and thereafter with five consecutive annual payments in the amount of $12,000,000 each, with any outstanding balance to be paid with the balloon payment under the term loan facility. The revolving credit facility will bear interest at the rate of LIBOR plus a margin of 2.25% per annum.

 

Seanergy will be required to pay an arrangement fee of 1.0% of the amount of the credit facilities and a commitment fee of 0.25% per annum on the committed but un-drawn and un-cancelled portion of the revolving credit facility.

 

The credit facilities will contain financial covenants, including requirements to maintain (i) an average quarterly liquidity of 5% of total debt, (ii) a minimum liquidity of 2.5% of total debt, (iii) a maximum leverage of 70%, (iv) a maximum net debt/EBITDA ratio of 6.5:1, and (v) a minimum EBITDA/interest expense ratio of 2:1. The credit facilities will also contain usual and customary general covenants.

 

The information and data contained in this proxy statement relating to the global shipping industry has been provided by Clarkson Research Services Limited (“Clarkson Research”) and is taken from Clarkson Research’s database and other sources. We do not have any knowledge that the information provided by Clarkson Research is inaccurate in any material respect. Clarkson Research has advised that: (i) some information in Clarkson Research’s database is derived from estimates or subjective judgments; (ii) the information in the databases of other maritime data collection agencies may differ from the information in Clarkson Research’s database; and (iii) while Clarkson Research has taken reasonable care in the compilation of the statistical and graphical information and believes it to be accurate and correct, data compilation is subject to limited audit and validation procedures.

 

Dry Market Overview

 

Shipping is a global industry and its prospects are closely tied to the level of economic activity in the world. The maritime shipping industry is fundamental to international trade, because it is the only practicable and cost-effective means of transporting large volumes of many essential commodities and finished goods. Dry bulk shipping is the primary means of transporting large amounts of raw materials necessary for many basic industries and the

development of global infrastructure. Shipping markets are highly competitive, and ship charter hire rates are very sensitive to changes in demand for and supply of capacity, and are consequently volatile.

 

The four largest segments in the shipping industry are tankers, which carry such cargo as crude oil and petroleum products; bulk carriers, which carry iron ore, coal and grain; containerships, which carry only containers; and gas tankers, which carry mostly liquefied petroleum gas (“LPG”) and liquefied natural gas (“LNG”). According to the latest available figures, total annual world seaborne trade in 2007 almost reached 8.0 billion metric tonnes, of which dry bulk cargoes accounted for 3.0 billion metric tonnes. The following table illustrates the evolution of the various categories of cargoes that comprise world seaborne trade.

 

 

 

Source: Clarkson Research, May 2008. Average percentage growth based on 1997-2007. (e) 2007 figures estimated.

 

The world internationally trading cargo ship fleet (as detailed in Clarkson Research’s “Shipping Intelligence Weekly”) comprised at the start of May 2008 approximately 50,657 ships with a total capacity of approximately 1,094 million deadweight tonnes (“DWT”). This included 6,779 bulk carriers (of 10,000 DWT and above). Measured by DWT, at the beginning of May 2008, the capacity of the world cargo ship orderbook (the number of confirmed shipbuilding contracts for newbuilding vessels to be delivered into the market) was equal to 47.6% of the existing world fleet. The orderbook included 2,799 bulk carriers (of 10,000 DWT and above) totaling 242.4 million DWT, equivalent to a historically high 60.8% of the existing dry cargo fleet (in terms of DWT).

 

Demand is affected by world and regional macro- and micro-economic and political conditions. The demand for seaborne transportation also depends on the distance over which the cargo is shipped. The demand for seaborne transportation is often expressed in tonne-miles, which is a product of (a) the volume of cargo transported, multiplied by (b) the distance over which this cargo is transported. For example, a tonne of iron ore transported from Brazil to China generates just over three times the demand for shipping capacity as the transportation of a tonne of iron ore from Western Australia to China. This distance effect is known as the “average haul” of the trade. Demand for shipping services is measured in billions of “tonne-miles”, which is the tonnage of cargo transported over the average haul distance for that trade. Major dry bulk commodities consist of iron ore, coal, grain, bauxite/alumina and phosphate rock. Minor bulk commodities cover a wide variety of commodities, such as forest products, iron and steel products, fertilizers, agricultural products, non-ferrous ores, minerals and petcoke, cement, other construction materials and salt. Seaborne trade in dry cargo has grown very strongly in recent years, registering a compound annual growth rate of 6.2% between 2002 and 2007. This increased level of trade has been driven by a strong world economy and demand from China.

 

Supply is determined by the size of the existing fleet as measured by cargo carrying capacity. Supply is increased primarily as a result of deliveries of newbuildings from the orderbook, but can also include vessels converted into the fleet. The global orderbook is larger than at any time in history, principally as a result of a boom in dry bulk rates over the course of the second half of 2007, which took the earnings of bulk carriers to previously unseen levels. This will result in a sizeable quantity of new vessels being delivered into the fleet in the coming years.

 

Removals from the fleet decrease supply and take the form of scrapping and casualties. The level of scrapping activity is affected by, among other factors, current and expected charter rate conditions, scrap prices, the age profile

of the fleet, and the levels of second hand values in relation to scrap values, as well as operating, repair and survey costs and the impact of regulations.

 

Finally, supply is a function of the operating efficiency of the fleet. Quantifying this is difficult, as it includes numerous external factors, over which ship owners have no control. These include armed conflicts, canal closures, port operational difficulties such as loading equipment breakdowns, and hinterland problems such as disruption to communications due to flooding. Another increasingly important factor in the fleet’s operating efficiency is port congestion, which occurs when demand for commodity shipments from a particular load area exceeds the available port throughput capacity. The above are relatively short-term in outlook. Long-term external factors affecting supply include development in international trade patterns. Longer loaded voyages may result in longer ballast (empty) voyages to return the ship to the load area.

 

Given the highly competitive nature of the charter market, it is primarily the existing supply/demand balance for sea transportation capacity that drives charter rates for bulk carriers. However, other factors, such as the type of charter, a vessel’s specification and market sentiment can affect the rate paid for a charter. In recent years, these factors have reinforced a tight market balance, resulting in a buoyant market. This has been reflected in both rates and asset values, which have reached record highs in the last twelve months.

 

There is also an active derivatives market in the dry bulk sector, which applies the concept of ‘swapping’ financial risk in Forward Freight Agreements (“FFAs”). FFAs have enjoyed substantial growth since their inception in 1991, and the most active market has become the Panamax sector.

 

Dry Bulk Demand

 

Dry bulk cargo is cargo that is shipped in large quantities and can be easily stowed in a single hold with little risk of cargo damage. The world seaborne trade in dry bulk cargoes has grown strongly in recent years. It increased from approximately 1.94 billion tonnes in 1997 to an estimated 3.01 billion tonnes in 2007, equivalent to a compound annual growth rate of 4.5%. Moreover, this growth in trade has accelerated over the last five years: between 2002 and 2007, the compound average growth rate reached 6.2%.

 

In broad terms, dry bulk cargo is categorized into either major or minor bulks. Major bulk commodities consist of iron ore, coal, grain, bauxite/alumina and phosphate rock. Together, these commodities form the majority of the seaborne dry bulk trade, especially for the larger ship sizes. Global seaborne trade in the five major bulks is expected to surpass 2 billion tonnes for the first time during 2008, after an estimated 1.98 billion tonnes of trade in 2007. Buoyed by continued strong Chinese demand, the seaborne trade in iron ore is currently anticipated to grow 8% year-over-year to 848 million tonnes in 2008. The immediate outlooks for the coal and grain trades are somewhat more mixed. With respect to coal, although strong demand exists, infrastructure problems at both mines and ports are currently acting to curb the rate at which exports can grow, with this being particularly true in the case of Australian exports. Turning to seaborne trade in grain, poor harvests in 2007/08 contributed to demand exceeding supply in the 2007/08 crop year. Although grain production is expected to recover in 2008/09 after increased plantings, the current record prices have triggered protective tariffs imposed by many countries to protect supplies, which could limit exports. Overall, exports of grain are expected to only grow 3% in 2008 — a similar growth rate to that of bauxite/alumina. Trade in phosphate rock is expected to remain stable at around 33mt per annum.

Seaborne Global Dry Bulk Trade

 

 

Source: Clarkson Research, May 2008

 

Minor bulk commodities cover a wide variety of commodities, such as forest products, iron and steel products, fertilizers, agricultural products, non-ferrous ores, minerals and petcoke, cement, other construction materials and salt. Much of this trade takes place in the smaller sized vessels, particularly Handysize vessels. Overall, trade in minor bulks is expected to continue growing at a healthy pace. It is currently projected to increase by 4% over the course of 2008 to reach approximately 1.07 billion tonnes.

 

Seaborne Minor Bulk Trade

 

 

Source: Clarkson Research, May 2008

 

The trade in dry bulk commodities is closely influenced by the underlying demand for these commodities, which is itself dependent on the level of economic activity and the overall health of the global economy. In general terms, when the global economy experiences an upswing, so the demand for shipping increases. Equally trade growth will typically slow in the event of an economic downturn. Dry bulk demand has benefited from the recent expansion in industrial production in Asia, and in particular in China. According to the International Monetary Fund (IMF), Chinese Gross Domestic Product (GDP) grew an average of 9.4% per year between 1997 and 2007, which is

more than four times the growth of the Euro area economies (2.2%) and three times higher than U.S.  growth during this period (3.0%). This trend is set to continue in the short-term, with Atlantic economies slowing notably while those in the Pacific remain relatively buoyant. Indeed, after growing 10.6% in the first quarter of 2008, Chinese GDP growth is currently forecast by the IMF to total 9.3% in 2008. This compares to anticipated growth of 1.4% in the Euro area economies and 0.5% in the United States.

 

As global dry bulk trade has grown, the relative importance of the Asia-Pacific region as a key driver of the growth in that trade has increased, in part reflecting the globalization of trade and outsourcing of the manufacturing process. As the table below on trade in selected major bulk commodities illustrates, total cargo growth between 1997 and 2007 was approximately 754 million tonnes. The Asia-Pacific region accounted for 79.9% of that increase, growing by 603 million tonnes over the period. Significantly, the Asia-Pacific region now represents 63.5% of the world’s seaborne trade in such cargo.

 

 

 

Source: Clarkson Research, May 2008 and based on other industry sources

 

Note 1: Grain imports refer to crop years (e.g. crop year 1996/97 is taken as the calendar year 1997) and include soybeans

 

Chinese demand is the main driver behind this rapid growth in Asian-Pacific demand. Over the course of the last decade, the growth of the Chinese economy has spurred a rapid industrialization which has required large quantities of raw materials. This is most evident in their demand for iron ore. In 2007, China imported a total of 383.7mt of iron ore, equivalent to approximately 49% of all global seaborne trade in this commodity (compared to around 16% in 2000). Chinese iron ore imports have grown by double digits in each year since the millennium, and are currently projected to reach 435.6mt in 2008. Although they are not as active in the seaborne coal trade to the same extent, their share of seaborne imports of a variety of minor bulks have also increased in recent years as a result of its industrialization, in particular those, such as pig iron and manganese ore, which have a role to play in the steel making process. Moreover, they are also the world’s largest importer of soybeans, accounting for 42% (30.8mt) of the total seaborne trade in this commodity in 2007.

 

In light of this, China is the primary driver behind the current good health of the dry bulk carrier market. The continued future health of the seaborne dry bulk market is dependent on the continued positive performance of the Chinese economy, or alternatively, on the emergence of other developing economies as a major source of world demand for raw materials. Developing countries which could prove to be sources of future demand include India, Brazil and Vietnam.

 

The demand for seaborne transportation also depends on the distance over which the cargo is shipped. The distance over which the various dry bulk commodities are transported is determined by seaborne trading and distribution patterns, which are principally influenced by the locations of production and consumption and their relative growth rates, as well as by changes in regional prices of raw materials and products such as coal, grain, and steel products. The iron ore and coal trades mostly originate from the southern hemisphere (primarily Australia, South Africa and Brazil) and some regions around the equator (Indonesia, India and Venezuela) with destinations in the northern hemisphere (Europe, China and Japan). The grain trades are less north-south focused, largely due to the dominating influence of the United States, which exports over half of the world’s seaborne grain. The main grain exporting countries are the United States, Australia, Argentina, Canada and the countries of the European Union, and the major importing regions are Europe, Africa, the Far East and the Middle East. The group of minor bulk commodities covers a wide and extremely varied set of commodities, and an equally varied set of origins and destinations.

Subsequently, the demand for seaborne transportation is often expressed in billions of tonne-miles, which is a product of (a) the volume of cargo transported, multiplied by (b) the distance over which this cargo is transported. The graph below shows estimated tonne-mile demand.

 

Seaborne Global Dry Bulk Trade

 

 

Source: Fearnleys, Clarkson Research, May 2008

 

Dry Bulk Supply

 

Bulk carrier vessels are generally divided into four major vessel types based on carrying capacity as illustrated in the table below.

 

 

 

Source: Clarkson Research, May 2008.

 

Note 1: Excludes combination carriers and Great-Lakes-only vessels, and only includes vessels over 10,000 DWT.

 

Note 2: Includes post-Panamax vessels.

 

Note 3: Includes Supramax vessels.

 

In broad terms, the supply of bulk carriers is primarily a function of four factors: (a) new bulk carrier deliveries; (b) conversions; (c) scrapping and loss of tonnage; (d) the operating efficiency of the global fleet.

 

With respect to deliveries, the level of newbuilding orders is a function primarily of newbuilding prices in relation to current and anticipated charter market conditions. The cost of a newbuilding is affected by a number of factors, including overall demand for varying types of large seagoing vessels, shipyard capacity and the costs of raw materials such as steel plate. The orderbook indicates the number of confirmed shipbuilding contracts for newbuilding vessels that are scheduled to be delivered into the market and is an indicator of how the global supply of vessels will develop over the next few years. The newbuilding market for ships is made up of owners looking to place contracts for new vessels, and the shipyards building them, and vessel newbuilding prices are determined by the demand for new vessels and the availability of shipbuilding capacity, as well as the cost of steel and other shipbuilding inputs, currency exchange rates and general economic conditions.

 

Historically, delivery of a bulk carrier has occurred within 12 to 18 months after ordering. At present, there are still instances of such short lead times when berths become available and are sold at a premium. However, on the whole, given current high demand, the delivery of newbuildings now generally takes an average of up to 3 years. As of May 1, 2008, the world bulk carrier orderbook for newbuildings was 242.4 million DWT. It is important to note that this is a provisional figure and may increase given the well-documented slow reporting of Japanese shipbuilding statistics. Even so, in historical terms this is a relatively high figure and will result in strong fleet growth in the coming years. However, 25.3% of these orders (in DWT terms) have been placed in Greenfield shipyards. Some of these projects are reportedly experiencing technical and financial problems. There is even a possibility that construction of some of the shipyards may be delayed and therefore, some slippage or cancellations from these sites is expected to be inevitable. Despite this however, there is still a considerable number of vessels to be delivered within the next few years and there is a risk that this may put downward pressure on charter rates.

 

 

 

Source: Clarkson Research, May 2008 and based on other industry sources.