Aristides J. Pittas, Chairman and CEO of Euroseas Ltd., Discusses the Company and Its Recent Developments in This Week's Capital Link Weekly Markets Report

NEW YORK, NY--(Marketwire - Sep 26, 2011) - Aristides J. Pittas, Chairman and CEO of Euroseas Ltd., was interviewed by Capital Link Shipping in this week's Capital Link Weekly Markets Report. The interview focused on recent developments at Euroseas and on the container and dry cargo sectors. Please find below the interview in its entirety. A PDF copy of the interview can also be accessed on www.CapitalLinkShipping.com or by clicking on the link below:

http://shipping.capitallink.com/files/2011/pittasQA092611.pdf

Q) In the past few years we have seen significant market volatility in both the container and dry bulk sectors. Despite the market fluctuations, Euroseas has maintained an excellent market position amongst its peers with a strong balance sheet, low cost operating structure and has paid 24 consecutive quarterly dividends. In addition, Euroseas participates in a successful joint venture company, called Euromar.

Let's begin with Euromar, the joint venture of Euroseas with Eton Park and Rhône Capital, formed in March 2010. The company recently acquired its seventh container ship vessel, the EM ASTORIA with more acquisitions expected to be made in the future. Discuss with us the reason why Euroseas decided to invest in Euromar and what you expect going forward?

A) The reason for investing in Euromar was to provide access to capital to take advantage of opportunities in the containership sector without dilution to Euroseas shareholders. With greater funds available to us we can go after projects that we would not be able to go after on our own; also, we realize the benefits of diversification as our investment is spread over many projects and our shareholders will earn proportionally higher returns if our investments are successful. To date, Euromar has purchased and taken delivery of seven vessels and has recently acquired its eight vessel with expected delivery in October 2011, with about 60% of the committed funds. Euromar's acquisitions include six vessels in the 2,500-2,800 TEU range and two in the 1,700-1,800 TEU range, all geared and all built post 2000 with an average age of seven years. Pursuant to the terms of the joint venture, of the total $175 million agreed to be invested by Euroseas, Eton Park Capital and Rhône Capital, $105 million has been committed with another $70 million remaining to be invested. Euroseas has thus contributed $15 million of its agreed $25 million commitment. We are currently exploring a number of options in the containership segment to add to the existing Euromar fleet.

Q) What about Euroseas growth plans? Can you tell us what your strategy is for Euroseas fleet expansion?

A) Just as in the case with Euromar, we are focused on adding value and size to Euroseas existing fleet and will only make accretive investments if opportunities exist. This said, our strong balance sheet continues to position our company's plans for fleet growth in both the drybulk and containership sectors, supported by our excellent relationships with our lenders, a strong cash position and our debt to market value of our fleet below 40%. The current drop in container charter rates may present us with opportunities to acquire vessels at lower prices than what is still expected for by sellers. It is also likely that declining drybulk vessel values will present us with accretive opportunities for investment in the not-too-distant future.

We estimate that we can allocate $30 million of our cash for further fleet expansion, for which after allowing for the remaining commitment of $10 million to our joint venture with Euromar, we will be able to designate about $20 million for our additional investments, over and above what we can do through Euromar, which translates to us being able to acquire approximately one or two additional ships.

Q) If Greece defaults on its debt, how will it impact Euroseas?

A) Our shareholders should not worry about a Greek default because Euroseas is an international shipping company whose vessels trade worldwide. Having said this, shareholders must remember that world trade which the global drybulk and container trades are very much linked to closely follows world GDP development, so if Europe and the United States were to enter into another recession, it will impact freight rates. Recently, we have seen downward revisions of economic growth for 2011 and 2012 for a number of economies including China. China's growth is generally expected to be around 9% for 2011 and 2012, down from recent estimates of 9.6%. Still China's GDP rate is healthy versus the western economies, namely Europe and the U.S. in which economists recently forecast GDP growth for 2012 to be around 1.6 and 2.9 respectively.

Q) Despite the downward revisions in the world GDP forecasts, Euroseas continues to pay a dividend every quarter which is impressive considering you are trying to grow your fleet and market rates have not been favourable.

A) Our dividend policy is a result of our comfortable balance sheet which enables our Board to continue paying meaningful dividends to our shareholders, even though we are still at the low end of the market cycle, and increasing container charter rates have not filtered down yet to the bigger parts of our fleet. For the second quarter 2011, we declared a quarterly dividend of $0.07 per share which was the 24^th consecutive quarterly dividend declared since we accessed the capital markets in August 2005, and it represents an annual yield of about 7.9% on the basis of our recent stock price. Throughout the last six years our dividend yields have always ranged between 5-12% excluding a quarter of 20% (the last quarter of 2008 when stock prices retreated quickly). This proves our ability to implement on our stated strategy of providing healthy dividends throughout market cycles without compromising growth opportunities.

Q) In the Euroseas conference call presentations you include a slide highlighting Euroseas impressive operational performance. What has been the reason for this success?

A) We believe that because of the efficiencies afforded to us through our management team, Eurobulk and the quality of our fleet, we maintain one of the lowest operating cost structures amongst the public shipping companies and we are very proud of this performance, especially as it is in conjunction with our operational fleet utilization in excess of 98.5% over the last five years, a level similar to that of our peers, despite the fact that the average age of our fleet is higher than most of the other listed companies. We take pride in our fleet management and strive to maximize utilization and minimize maintenance expenditures. In addition, we have an outstanding safety and environmental record and in planning our fleet expansion, we are not neglecting the cost side of our operations, which is one of our competitive advantages.

Q) Please update our readers with Euroseas charter coverage for the container and dry bulk vessels.

A) As far as our containerships are concerned, we currently have 88% coverage for 2011. We believe we will continue to capitalize on the strengthening of the containership market and we will be able to re-charter the ships that are coming off charter this year at an average likely higher than what they are currently getting. Our belief is that the market has at least two more years of stable to improving rates if the global environment does not deteriorate substantially. We will therefore generally be renewing expiring charters for periods of up to a year. Over the next few quarters we expect to see positive contribution to our earnings, via our container fleet.

Our drybulk fleet is fully covered for the remainder of 2011, either by physical charters or via FFA contracts. We expect to see close to no influence in our earnings from the developments in this market for this year. For 2012 our coverage is 67% and for 2013 to 29%, with ships opening up gradually over time.

Q) Has Euroseas experienced any payment issues or renegotiations of its charters?

A) We haven't faced such issues ourselves for two reasons. First, our charter contracts are not much higher than current market levels, and second, we do not have long term period contracts going forward that exceed more than a couple of years. The payment issues that recently made the news are a result of the employment contacts that were at extreme premiums to current levels and most of these have anyway been reasonably resolved. We have refrained from fixing our vessels at very high levels for long periods, especially for drybulk ships where in bad market conditions you may see charterers want to renegotiate. In the container sector, I feel that renegotiation of charters is much more difficult. They are more substantial outfits and it is very seldom that you see renegotiations especially from first class charterers. In short, we have not faced any such issues, neither in the drybulk or the container sector.

Q) Lastly, please provide your thoughts on the dry bulk and container industries?

A) On the drybulk market we expect a low market environment in 2011 and 2012, driven by the excess number of deliveries, not because of a lack of demand. Far too many newbuilding deliveries need to be cancelled or postponed, and/or drybulk trade to grow at a significantly faster pace in order to balance the market. The solution will eventually come through scrapping which we expect to continue at its current high pace for the next 18 months, and lead to a more balanced market some time in 2013.

For the containership market, the outlook is still more positive than for drybulk, despite the recent spike in ordering. For the next two and a half years, supply and demand should remain fairly balanced, unless we see further heavy ordering or a global growth significant slowdown. The good news for us is that supply growth in the container market is mainly in the larger sized segment. The smaller feeder sized ships in which we operate have a small order book. In addition slow steaming is still a positive factor as fuel prices remain high. We expect charter rates to rebound from their current dip, which we attribute mostly to the unwarranted expansion of the liner services, and to continue moving gradually higher in the medium term.

About Euroseas Ltd.
Euroseas Ltd. was formed on May 5, 2005 under the laws of the Republic of the Marshall Islands to consolidate the ship owning interests of the Pittas family of Athens, Greece, which has been in the shipping business over the past 136 years. Euroseas trades on the NASDAQ Global Select Market under the ticker ESEA since January 31, 2007.

Euroseas operates in the dry cargo, drybulk and container shipping markets. Euroseas' operations are managed by Eurobulk Ltd., an ISO 9001:2000 certified affiliated ship management company, which is responsible for the day-to-day commercial and technical management and operations of the vessels. Euroseas employs its vessels on spot and period charters and through pool arrangements.

The Company has a fleet of 16 vessels, including 4 Panamax drybulk carriers and 1 Handymax drybulk carrier, 3 Intermediate containership, 5 Handysize containerships, 2 Feeder containerships and a multipurpose dry cargo vessel. Euroseas' 5 drybulk carriers have a total cargo capacity of 331,808 dwt, its 10 containerships have a cargo capacity of 17,787 teu and its multipurpose vessel has a cargo capacity of 22,568 dwt or 950 teu.

About the Capital Link Weekly Markets Report
The Capital Link Shipping Weekly Markets Report features contributions on the shipping and capital markets from select content contributors in addition to content developed by Capital Link. Its aim is to foster better understanding of shipping and raise its profile in the wider investment community by providing on a systematic basis a comprehensive weekly review of developments and trends in the shipping and capital markets as well as on listed shipping companies. The Weekly Report does not intend to provide investment advice or advice of any kind and is provided without any guarantee as to the accuracy or completeness of the information therein.

The Weekly Report features

• A Review of the news of all U.S. and European listed shipping companies
  
  
• Commentary by Barry Parker
  
  
• China Update with input from Guotai Junan Securities Co. Ltd in China
  
  
• Company Reviews and CEO Interviews
  
  
• Shipping Equities Review
  
  
• Equity Trading Statistics provided by Knight Capital
  
  
• Shipping Bonds Activity provided by Knight Capital
  
  
• A Snapshot of the Weekly economic and Shipping Environment provided by Golden Energy
  
  
• Dry Bulk Market Highlights provided by Intermodal Shipbrokers
  
  
• Tanker Market Highlights provided by Charles R. Weber Company
  
  
• Tanker Market Opinion provided by Poten & Partners
  
  
• Freight Rate & Asset Trends provided by Intermodal Shipbrokers
  
  
• Container Market Highlights provided by Baremar Seascope
  
  
• S&P Secondhand, Newbuilding & Demolition Markets provided by Golden Energy
  
  
• Forward Freight Agreements - FFAs provided by SSY Futures
  
  
• A Calendar of Quarterly Earnings Announcements for listed shipping companies

To access the Markets Report free of charge please go to www.CapitalLinkShipping.com and/or copy and paste in your browser the link below:

http://shipping.capitallink.com/newsletters/

To receive electronically a free copy of the Capital Link Shipping Weekly Markets Report, please subscribe at http://shipping.capitallink.com/newsletters/

About Capital Link, Inc.
Capital Link is a New York based advisory and investor relations firm with strategic focus, among other areas, on shipping. It provides Investor Relations and Financial Communications services to international shipping companies listed on U.S. and European Exchanges including many of the companies featured in The Weekly Markets Report.

Capital Link's initiatives aimed to foster better understanding of shipping among investors include:

• Shipping website (www.CapitalLinkShipping.com),
  
  
• The Weekly Markets Report,
  
  
• Investor Forums in New York, London and Athens (www.CapitalLinkForum.com),
  
  
• Industry Webinars (www.CapitalLinkWebinars.com)
  
  
• Maritime Indices (www.MaritimeIndices.com), which are also available on Bloomberg, Reuters and Factset and are already referenced by several analysts.