F-1/A: OceanPal Inc. Files Amended Prospectus for Highly Dilutive Unit Offering Amidst Significant Financial Losses and Nasdaq Delisting Concerns

OceanPal Inc. has filed an amended registration statement for a public offering of units, each consisting of common shares or pre-funded warrants and highly dilutive Class C Warrants, aiming to raise $13.75 million in net proceeds for general corporate purposes and fleet expansion, despite reporting a substantial increase in net loss for 2024 and facing potential Nasdaq delisting risks.

Summary

• OceanPal Inc. is offering 11,627,906 units, each comprising one common share (or one pre-funded warrant) and one Class C Warrant, at an assumed public offering price of $1.29 per unit.
• The offering aims to raise approximately $13.75 million in net proceeds, or up to $15.84 million if the over-allotment option is fully exercised, for general corporate purposes and fleet expansion.
• The Class C Warrants are immediately exercisable for three years at an initial exercise price of 225% of the public offering price, subject to two reset dates (4th and 8th trading days after issuance) that can significantly lower the exercise price and increase the number of shares issuable.
• The Warrants include a 'zero cash exercise' option for 90 calendar days post-issuance, allowing holders to receive twice the number of shares issuable upon cash exercise without additional payment, making it highly unlikely the company will receive cash from warrant exercises.
• If all Warrants are exercised on a zero cash basis at the floor price, up to 174,418,590 common shares (or 200,581,395 with over-allotment) could be issued without additional cash payment to the company.
• The company reported a net loss and comprehensive loss of $17.86 million for the year ended December 31, 2024, a significant increase from $1.98 million in 2023.
• Vessel revenues increased by $6.74 million to $25.70 million in 2024, driven by stronger Capesize market conditions and an increase in operating days (1,747 in 2024 vs. 1,691 in 2023).
• Voyage expenses increased by $1.77 million to $3.71 million in 2024, mainly due to higher commissions and bunker losses from a newly acquired MR2 product tanker.
• Vessel operating expenses rose by $2.07 million to $12.49 million in 2024, attributed to increased ownership days and higher repair, spares, and stores costs.
• An impairment loss of $6.12 million was recorded in 2024 for the M/V Melia and M/T Zeze Start, and the M/V Baltimore (sold in November 2024). No impairment loss was recognized in 2023.
• General and administrative expenses increased by $0.93 million to $6.21 million in 2024, primarily due to compensation costs for restricted convertible Series C preferred stock awards and increased insurance costs.
• The company paid $6.75 million in support agreement costs in 2024 related to an agreement with Sphinx.
• OceanPal Inc. regained compliance with Nasdaq's minimum $1.00 bid price requirement on June 30, 2025, after being non-compliant since April 17, 2025.
• The company's fleet consists of two Panamax dry bulk carriers (weighted average age 20.4 years) and one MR2 product tanker (age 16.3 years) as of July 10, 2025.
• As of December 31, 2024, the aggregate carrying value of four vessels exceeded their aggregate charter-free market value by approximately $2.7 million.
• Diana Shipping Inc. owned 47.95% of outstanding common shares and 207 Series C Preferred Stock as of July 10, 2025, maintaining significant influence.
• The company has an investment in the construction of two methanol-ready, stainless steel chemical tankers, with the last installment of $1.38 million paid in March 2025.

Sentiment

Score: 2

Explanation: The sentiment is overwhelmingly negative due to a significant increase in net loss, substantial impairment charges, declining working capital, and a highly dilutive capital raise structure that is unlikely to yield additional cash from warrant exercises. The offering itself carries a high risk of further share price decline and potential Nasdaq delisting due to its dilutive nature.

Positives

• Vessel revenues increased by $6.74 million to $25.70 million in 2024, driven by stronger Capesize market conditions and increased operating days.
• Regained compliance with Nasdaq's minimum $1.00 bid price requirement on June 30, 2025.
• The company has a right of first refusal over one remaining dry bulk carrier from Diana Shipping Inc., offering potential fleet expansion opportunities.
• All vessels are equipped with approved ballast water management systems and are in compliance with current regulations.

Negatives

• Net loss and comprehensive loss significantly increased to $17.86 million in 2024 from $1.98 million in 2023.
• Recorded a substantial impairment loss of $6.12 million in 2024 for two vessels and one vessel held for sale.
• Voyage expenses increased by $1.77 million and vessel operating expenses by $2.07 million in 2024.
• Paid $6.75 million in support agreement costs in 2024.
• The offering's Class C Warrants are highly dilutive, with reset provisions and a zero cash exercise option, making it 'highly unlikely' the company will receive additional funds from their exercise.
• Common shareholders are likely to suffer substantial dilution and a significant decrease in share value due to the warrant terms.
• The company's fleet consists of secondhand vessels with an age above the industry average (20.4 years for Panamax, 16.3 years for MR2 tanker), which may lead to increased operating expenses and financing difficulties.
• The aggregate carrying value of four vessels exceeded their aggregate charter-free market value by approximately $2.7 million as of December 31, 2024.
• The company depends on a few significant customers, with three charterers accounting for 57% of revenues in 2024, posing counterparty risk.
• Working capital decreased from $17.76 million in 2023 to $9.02 million in 2024.

Risks

• Charter hire rates in the shipping industry are volatile and have fluctuated significantly, which may adversely affect business, financial condition, operating results, and ability to comply with loan covenants.
• Global economic conditions, including inflationary pressures and potential economic downturns in China, India, the U.S., or EU, may negatively impact the tanker and dry bulk shipping industry and demand for services.
• Geopolitical conditions (e.g., conflicts in Ukraine, Middle East, Red Sea attacks) and economic sanctions (e.g., against Russia, proposed U.S. tariffs on Chinese shipping) can disrupt seaborne transportation, increase costs, and affect business.
• Operational risks and damage to vessels (marine disasters, mechanical failures, human error, piracy, terrorism) could lead to substantial liabilities not covered by insurance, harm reputation, and cause business interruptions.
• Operating secondhand vessels with an age above the industry average may lead to increased technical problems, higher operating expenses, difficulty in financing, and more rapid depreciation in vessel values.
• Conflicts of interest may arise due to affiliations of principal officers and directors with other entities (Diana Shipping Inc., Steamship, DWM, START) that own or manage competing vessels or have conflicting fiduciary duties.
• Dependence on third-party entities (DWM, START, Steamship) for fleet management means termination or failure to perform by these entities could adversely affect operations.
• Cyber-attacks could materially disrupt business operations, lead to unauthorized information release, or alter systems, with no cyber-liability insurance currently maintained.
• Climate change and greenhouse gas restrictions (e.g., IMO 2020, EU ETS, FuelEU Maritime) may increase operating and capital costs, require new emission controls, or affect revenue generation.
• Increasing scrutiny and changing expectations from investors, banks, and market participants regarding Environmental, Social, and Governance (ESG) policies may impose additional costs or limit access to capital.
• Counterparty risks on contracts, especially in depressed market conditions, could lead to renegotiations, defaults, or difficulty in securing substitute employment for vessels.
• Highly competitive international shipping industry with larger competitors may reduce opportunities or force lower charter rates.
• Inability to attract and retain qualified key management personnel, employees, or consultants could delay development efforts.
• Technological innovation and evolving quality/efficiency requirements from customers could reduce charter income and vessel value.
• Inadequate insurance coverage may not compensate for all losses or third-party liabilities.
• Exposure to U.S. dollar and foreign currency fluctuations could adversely affect results of operations.
• Dependence on a few significant customers means the loss of one or more could adversely affect operating results and financial performance.
• As an emerging growth company, reduced disclosure requirements may make common shares less attractive to investors, leading to a less active trading market and more volatile share price.
• As a holding company, dependence on subsidiaries to distribute funds to satisfy financial obligations.
• Difficulty in serving legal process or enforcing judgments against the company, directors, or management due to Marshall Islands incorporation and non-U.S. residency of key personnel.
• Potential for substantial dilution and significant decrease in common share value due to the price resets and zero cash exercise option of the Warrants.
• Nasdaq may halt trading or delist common shares due to public interest concerns arising from the highly dilutive nature of this offering or if the bid price drops again.
• Broad discretion in the use of offering proceeds, which may not yield a favorable return.
• No public market for the Pre-Funded Warrants or Warrants, limiting their liquidity.

Future Outlook

The company intends to use the net proceeds from this offering for general corporate purposes, including funding for working capital needs and fleet expansion. Future growth is expected to involve acquiring additional secondhand vessels, potentially from related parties, and considering newbuilding contracts. The company anticipates that its primary sources of funds for at least the next twelve months will be available cash, internally generated cash flows, and equity offering proceeds. The company believes its working capital and anticipated funds, along with access to equity capital markets, will be sufficient to meet liquidity needs for at least twelve months. However, the company acknowledges that its revenues and results of operations in 2025 will be subject to demand for services, inflation, market disruptions, and interest rates, and that continued adverse economic, political, or social conditions could negatively impact charter rates.

Management Comments

• We believe it is highly unlikely that a holder of the Warrants would pay an exercise price in cash to receive one Common Share when the holder could instead choose the zero cash exercise option and pay no cash to receive more Common Shares than they would receive if they did pay an exercise price.
• We will likely not receive any additional funds and do not expect to receive any additional funds upon the exercise of the Warrants.
• Our management will have significant flexibility in applying the net proceeds of this offering.
• Management does not consider inflation or interest rates to be a significant risk to direct costs in the current and foreseeable economic environment.
• We anticipate that our primary sources of funds for at least twelve months from the date of this report will be available cash, internally generated cash flows from our anticipated revenues and equity offering proceeds.
• We believe that our working capital and these anticipated sources of funds, as well as our ability to access the equity capital markets if needed, will be sufficient to meet our liquidity needs for at least twelve months from the date of the annual report.

Industry Context

The seaborne transportation industry, including dry bulk and product tanker sectors, is highly volatile and influenced by global economic conditions, geopolitical events, and supply-demand dynamics. Demand for dry bulk is tied to global economic growth and commodity trade, while tanker demand is linked to oil consumption and refined petroleum product trade. The industry faces increasing environmental regulations (e.g., IMO 2020, EU ETS, FuelEU Maritime) and cybersecurity threats, which impose additional costs and compliance burdens. The market is highly competitive and fragmented, with a trend towards consolidation. The company's fleet, consisting of older secondhand vessels, faces challenges from more fuel-efficient 'eco-vessels' and stricter age-related charterer requirements, potentially impacting its competitiveness and profitability.

Comparison to Industry Standards

• The company's dry bulk vessels have a weighted average age of 20.4 years and its MR2 product tanker 16.3 years, which is stated as 'above the industry average,' potentially leading to higher operating expenses and reduced financing options compared to companies with more modern fleets.
• The average age at which a vessel is scrapped was 33 years in 2024, 30 years in 2023, and 32 years in 2022, indicating the company's vessels are approaching or exceeding typical scrapping ages, which could impact their useful life and market value.
• The company's fleet utilization rate decreased from 99.1% in 2023 to 96.8% in 2024, suggesting a slight decrease in efficiency in finding suitable employment for its vessels compared to the prior year.
• The company's TCE rate increased from $9,969 in 2023 to $12,184 in 2024, reflecting stronger Capesize market conditions, which is a positive trend in line with market improvements for larger dry bulk vessels.
• Daily vessel operating expenses increased from $5,832 in 2023 to $6,568 in 2024, which is consistent with the general industry trend of rising operating costs due to inflation and increased repair/spares costs, especially for older vessels.

Corporate Governance

Related Party Transactions

• Steamship Shipbroking Enterprises Inc. (controlled by the Chairperson) provides insurance, administrative, and brokerage services.
• Management Agreement for insurance-related services with Steamship: fixed fee of $500/month per employed vessel or $250/month per laid-up vessel.
• Administrative Services Agreement with Steamship: monthly fee of $10,000.
• Brokerage Services Agreement with Steamship: lump sum commission of $150,000 per month plus 2.5% on hire/freight for dry bulk vessels (replaced on March 12, 2025, with retroactive effect from January 1, 2025, with similar terms).
• Diana Shipping Inc. (NYSE: DSX) is a significant shareholder (47.95% of common shares as of July 10, 2025) and holds Series B and Series C Preferred Stock.
• Right of First Refusal Agreement with Diana Shipping Inc.: Diana Shipping granted the company a right of first refusal over six dry bulk carriers, with one remaining available for purchase at fair market value.
• Non-Competition Agreement with Diana Shipping Inc.: Diana Shipping granted the company a right of first refusal over opportunities to acquire or charter-in dry bulk vessels larger than 70,000 dwt built prior to 2006, and spot market employment opportunities for its vessels. This agreement terminates if Diana Shipping's ownership falls below 10% and no common executive officers are shared.
• Diana Wilhelmsen Management Limited (DWM), a 50/50 joint venture of Diana Shipping, provides commercial and technical management for dry bulk fleet: 1.25% on hire/freight of gross income plus $18,500/month per employed vessel or $9,250/month per laid-up vessel.
• DWM also provides technical supervision and advice for the tanker vessel for $1,000 per calendar month plus expenses.
• Sea Transportation Inc. (START), controlled by a director of the company, provides commercial services to the M/T Zeze Start: fixed fee of $300 per day and 3.0% on vessel revenues.
• Acquisition of M/T Zeze Start on July 15, 2024, from an entity controlled by a director of the company for $27.0 million, with $18.9 million cash and the remainder in 9,442 shares of Series D Preferred Stock.
• Altair Travel Agency S.A., an entity in which the company's Chairperson holds equity interests, provides travel-related services.

Stakeholder Impact

• **Shareholders (Existing):** Face substantial dilution (88.52% dilution to existing shareholders, 54.36% decrease in book value per common share) due to the offering structure, especially the highly dilutive Class C Warrants with zero cash exercise, which are unlikely to generate additional funds for the company. The offering also carries a risk of Nasdaq delisting, which would negatively impact liquidity and share price.
• **Shareholders (New Investors):** While not immediately diluted at the offering price, they are exposed to significant future dilution from warrant exercises and potential stock price volatility and delisting risks.
• **Employees/Crew:** The company relies on third-party managers for crewing. Rising crew costs and potential disruptions from geopolitical events (e.g., Ukraine conflict) could affect their wages and well-being, though the company states it has not experienced difficulty in recruiting.
• **Customers (Charterers):** The company's dependence on a few significant customers (57% of revenues from three charterers in 2024) creates counterparty risk. Economic downturns or geopolitical events could impact charterers' ability to meet obligations, affecting the company's revenues.
• **Creditors/Lenders:** A decline in vessel market values could trigger breaches of financial covenants in future borrowing facilities. The company's increased net loss and decreased working capital could make it more challenging to obtain future financing on acceptable terms.
• **Regulatory Authorities:** The company is subject to complex and evolving environmental, safety, and financial reporting regulations (e.g., IMO, EU, U.S. SEC, Nasdaq). Non-compliance could result in fines, penalties, or operational restrictions.

Next Steps

• The company expects to deliver the securities offered on or about July 2025, subject to customary closing conditions.
• Management will have significant flexibility and discretion in applying the net proceeds for general corporate purposes, working capital, and fleet expansion.
• The company intends to expand its fleet in the future by acquiring additional secondhand vessels, potentially from related parties, and may consider newbuilding contracts.
• The company will continue to monitor and comply with evolving environmental regulations (e.g., IMO, EU ETS, FuelEU Maritime) and cybersecurity requirements, which may entail future capital expenditures and operational adjustments.
• The company will continue to evaluate the duration of its charters and extend or reduce charter hire periods based on dry bulk and tanker shipping industry developments.
• The review of CII regulations and guidelines must be completed by January 1, 2026, which may lead to further operational adjustments.

Key Dates

Recommendation

Keywords

Shipping, Dry Bulk, Tanker, SEC Filing, Public Offering, Warrants, Dilution, Nasdaq, Financial Results, Risk Factors, Maritime, OceanPal Inc., F-1/A, Capital Raise, Corporate Governance, Environmental Regulations, Geopolitical Risk, Fleet Management