Euroseas, Ltd. (NasdaqGS:ESEA) announced a private placement of 30,700 shares of its series B convertible perpetual preferred shares at $944.62541 for gross proceeds of $29,000,000 on January 26, 2014. The company will issue 25,000 shares to new investor, Tennenbaum Opportunities Partners VI L.P., a fund managed by Tennenbaum Capital Partners, LLC and 5,700 shares to an affiliate of the company. The shares will pay dividends, in cash or in kind, during the first five years at a rate of 0% or 5%, depending on the trading price of the company's common stock. In addition, if a cash dividend is paid on the company's common stock during such time, then if the dividend paid on the series B preferred shares is 5%, the holders of series B preferred shares shall receive such dividend in cash and shall also receive an additional cash dividend in an amount equal to 40% of the common stock dividend it would have received on an as-converted basis. If, however, the dividend on the series B preferred shares is 0%, then the holders of series B preferred shares shall receive a cash dividend equal to greater of 100% of the common stock dividend it would have received on an as-converted basis, and 5%. If a cash dividend is paid on the company's common stock after the first five years, the holders of series B preferred shares shall receive an additional cash dividend in an amount equal to 40% of the common stock dividend it would have received on an as-converted basis. The dividend rate will increase to 12% in years six and seven and to 14% thereafter. The preferred shares are convertible into common stock at an initial conversion price of $1.45. The preferred shares are redeemable in cash by the company at any time after the fifth anniversary of the original issue date. Holders of the Series B Preferred Shares may require the company to redeem their shares only upon the occurrence of certain corporate events. The company will redeem the preferred shares at a redemption price equal to 100% of the series B liquidation preference. As a part of the transaction, holders of series B preferred shares have the right to appoint one director to the company's board of directors.

The company has previously provided to Tennenbaum Capital Partners, LLC, as agent for the investor purchaser, a deposit of $50,000, to be used from time to time to cover the transaction costs. Any portion of the deposit remaining with the investor after the payment of transaction costs after closing, if any, will promptly be returned to the company. The transaction costs to be paid by the company will be limited to $150,000. The company will pay placement agent's fees, financial advisory fees, or brokers' commissions relating to or arising out of the transaction, which are not part of the transaction costs. Lawrence Rutkowski of Seward & Kissel LLP will act as legal advisor to the company and an affiliate of the company. John F. Imhof Jr of Watson, Farley & Williams LLP will act as legal advisor to Tennenbaum Capital Partners, LLC. RMK Maritime will act as placement agent to the company in the transaction. The transaction is expected to close on January 29, 2014.