Greece: Box Ships to Acquire Two Post-Panamax Container Vessels

Box Ships Inc., a global shipping company specializing in the seaborne transportation of containers, announced that it has entered into agreements with subsidiaries of Orient Overseas Container Line Ltd. (OOCL) to acquire two 5,344 TEU post-Panamax container vessels, the 1995-build OOCL Hong Kong and the 1996-build OOCL China.

The purchase price per vessel is US$31.155 million, inclusive of fees and the expected dates of delivery for both vessels to the Company are to take place no later than July 14, 2012. Both vessels will be chartered to OOCL for a period of thirty-six (36) months plus or minus thirty days (30) at a net daily rate of US$26,465. The employment of the two vessels is anticipated to generate approximately US$57.0 million of net revenues for the agreed period of the charters.

To finance this acquisition, the Company issued $40.0 million of 9.75% Series B Cumulative Redeemable Perpetual Preferred Shares, or the Series B preferred shares, to our Chairman, President and Chief Executive Officer, Michael Bodouroglou. The Series B preferred shares have a dividend rate of 9.75% per annum per $30.00 of Liquidation Preference per share. Each of the 1,333,333 Series B preferred shares shall receive a five year warrant, for no additional consideration, to purchase one share of our common stock at $7.74, the closing price of our shares of common stock on June 11, 2012. Our Series B preferred shares are redeemable at our option at the Liquidation Preference price until September 1, 2012, and thereafter for a premium. In the event the Company has not redeemed the Series B preferred shares by June 30, 2015, any holder of then outstanding Series B preferred shares shall receive, on a pro-rata basis, common stock representing, in the aggregate at the time, 5% of the Company’s common shares.

The Company will fund the balance of the purchase price by drawing down a $25.0 million senior secured credit facility pursuant to a firm commitment letter it has received from a major European bank. The credit facility has a tenor of three years with a balloon of $10.0 million, and will accrue interest at a rate of LIBOR plus 3.75%.

Mr. Michael Bodouroglou, Chairman, President and Chief Executive Officer of Box Ships Inc., commented:

“We are pleased to announce the acquisition of the OOCL vessels that is consistent with our stated strategy to grow the size of our fleet and our cash flow and provides evidence of the emergence of Box Ships as a reputable and reliable containership operator. The vessels are in a size segment that we believe will continue to be critical in the global container seaborne transportation logistical chain and facilitate the commencement of our working relationship with OOCL, a major global container liner company. The three year charters extend the average term of our charter portfolio (from 23 months to 26 months), further stagger the maturities of our contracts and further diversify our sources of revenue. In addition, the cash flow generated from the OOCL charters after servicing both the $25 million credit facility and paying dividends to the Series B preferred shares will provide additional funds available to support our stated dividends to our common shareholders.

My investment in the Series B preferred shares was necessitated by the very challenging capital markets conditions and the need to consummate the acquisition within a certain period of time. It is also a testament of my belief in this acquisition, the prospects of Box Ships and the containership sector in general. The Series B preferred shares including the warrants are redeemable at the option of the Company at the Liquidation Preference until September 1, 2012 and the Company intends to offer up to $21.0 million of these same Series B preferred shares to investors, the proceeds of which will be used to retire an amount of the Series B preferred shares I invested in.”