SCHEDULE: OceanPal Insider Ownership Rises to 64.73%

Semiramis Paliou and affiliated entities increased their deemed beneficial ownership in OceanPal Inc. to 64.73% through convertible preferred stock.

Summary

• Semiramis Paliou, along with Tuscany Shipping Corp. and 4 Sweet Dreams S.A., collectively known as the Reporting Persons, now beneficially own 12,288,959 shares of OceanPal Inc. common stock, representing 64.73% of the class.
• This increase in percentage ownership is due to a change in the conversion price of the Issuer's Series C and Series D Preferred Stock, which are convertible into common shares.
• The Reporting Persons' holdings include 9,404 shares of Series D Preferred Stock held by Tuscany, convertible into 8,034,859 common shares (54.54%).
• 4 Sweet Dreams holds 1,339 shares of Series D Preferred Stock, convertible into 1,144,053 common shares (10.45%), and 3,640 shares of Series C Preferred Stock, convertible into 3,110,047 common shares (28.40%).
• Paliou, as the owner of Tuscany and 4 Sweet Dreams, is deemed to have indirect beneficial ownership of all these shares.
• The Series C and D Preferred Stock have conversion restrictions, preventing conversion if it results in beneficial ownership exceeding 49% of total outstanding common shares.
• Paliou also holds 1,200 shares of Series E Preferred Stock, issued on March 20, 2023, which carry significant voting rights (up to 25,000 votes per share, capped at 15% of total votes) and are convertible into common shares after a 'Series B Event'.

Sentiment

Score: 6

Explanation: The increased insider ownership by a key executive (Chairperson) can be viewed positively as a sign of confidence and alignment of interests. However, the very high concentration of ownership (64.73%) and significant voting power through preferred stock also introduces governance concerns regarding minority shareholder influence and potential for decisions favoring the controlling party.

Positives

• Increased insider ownership by Semiramis Paliou, a director and Chairperson, potentially signals strong confidence in the company's future.
• The Reporting Persons' stated purpose is for investment and to increase shareholder value, aligning their interests with other shareholders.
• The acquisition of Series D Preferred Stock from Abra Marinvest Inc. by Tuscany indicates active investment and strategic positioning.

Negatives

• Highly concentrated ownership (64.73%) by a single individual and her controlled entities could reduce liquidity for other shareholders and potentially limit the influence of minority shareholders.
• The significant voting power associated with the Series E Preferred Stock (up to 15% of total votes, potentially more after a Series B Event) further consolidates control.
• The 49% conversion restriction on Series C and D Preferred Stock, despite the reported 64.73% beneficial ownership, creates complexity regarding actual voting power and potential dilution, as the full conversion into common shares is limited.

Risks

• Concentrated Ownership Risk: The high percentage of beneficial ownership by the Reporting Persons (64.73%) could lead to decisions that primarily benefit the controlling shareholder rather than all shareholders.
• Limited Minority Shareholder Influence: Minority shareholders may have reduced ability to influence corporate governance or strategic decisions due to the concentrated voting power.
• Preferred Stock Conversion Limitations: While the Reporting Persons beneficially own 64.73% of the common stock on an as-converted basis, the Series C and D Preferred Stock cannot be converted if it results in beneficial ownership of more than 49% of total issued and outstanding Shares. This creates a discrepancy between deemed beneficial ownership and actual convertible common shares, potentially impacting market perception and liquidity.
• Series E Preferred Stock Control: The significant voting rights of the Series E Preferred Stock held by Paliou, especially the potential removal of the 15% cap upon a Series B Event, could further entrench management control.

Future Outlook

The Reporting Persons may acquire additional shares or dispose of existing holdings based on ongoing investment evaluations, market conditions, and other opportunities. They reserve the right to act in concert with other shareholders and recommend courses of action to management and the Board to increase shareholder value.

Management Comments

• Paliou is a director and the Chairperson of the Board of Directors and the Executive Committee of the Issuer and may have influence over the corporate activities of the Issuer.
• The Reporting Persons acquired the Shares... solely for investment purposes.
• The Reporting Persons... are in contact with members of the Issuer's management, the other members of the Issuer's Board of Directors, other significant shareholders and others regarding alternatives that the Issuer could employ to increase shareholder value.

Industry Context

This filing reflects a significant concentration of ownership in OceanPal Inc., a company operating in the shipping industry. Such high insider ownership is not uncommon in certain segments of the shipping industry, particularly among family-controlled or founder-led companies, where long-term strategic control is often prioritized. This level of control can provide stability but also raises questions about corporate governance and minority shareholder rights compared to more widely held public companies.

Comparison to Industry Standards

• The 64.73% beneficial ownership by Semiramis Paliou and her affiliated entities represents a highly concentrated ownership structure, which is significantly above the average insider ownership typically observed in large-cap, widely-held public companies (often below 10-20%).
• While some smaller or family-controlled shipping companies, such as Star Bulk Carriers (where certain insiders hold substantial stakes) or Navios Maritime Holdings (historically with significant founder control), may exhibit higher insider ownership, OceanPal's level of control is at the upper end, potentially comparable to private entities or companies undergoing a transition to public markets where founders retain strong influence.
• The voting power granted by the Series E Preferred Stock, allowing up to 25,000 votes per share and a 15% cap (potentially removable), further solidifies control, a mechanism sometimes seen in dual-class share structures (e.g., Google, Facebook) but less common in traditional shipping companies, which typically rely on common share voting.

Corporate Governance

Related Party Transactions

• Reporting Persons, as common shareholders of Diana Shipping Inc., elected to receive Series D Preferred Stock from Diana Shipping Inc. distributions instead of common shares.
• Tuscany Shipping Corp. purchased shares of Series D Preferred Stock from Abra Marinvest Inc. (relationship not explicitly stated as related party, but often these are affiliated entities in such structures).
• Issuance of 1,200 shares of Series E Preferred Stock to Semiramis Paliou, who is the Chairperson and a director of the Issuer.

Stakeholder Impact

• Shareholders: Increased concentration of voting power with the Reporting Persons may reduce the influence of other shareholders on corporate decisions. The high insider ownership could be seen as a positive signal of commitment but also a negative for governance diversity.
• Management: The Chairperson, Semiramis Paliou, and her controlled entities now hold a dominant stake, potentially streamlining strategic decision-making but also increasing the risk of conflicts of interest.
• Creditors: A stable, controlled ownership structure might be viewed positively by creditors, indicating long-term commitment and potentially stable leadership.

Next Steps

• Reporting Persons may acquire additional shares or dispose of current holdings.
• Reporting Persons may act in concert with other shareholders or recommend courses of action to management and the Board.
• Conversion of Series E Preferred Stock is contingent upon a 'Series B Event' (cancellation or transfer of Series B Preferred Stock).

Key Dates

Recommendation

The significant increase in beneficial ownership by Semiramis Paliou and her affiliated entities to 64.73% signals strong insider confidence and alignment with the company's long-term prospects. As Chairperson, her increased stake could lead to more decisive strategic direction. However, this high concentration of control, coupled with the complex voting rights of the Series E Preferred Stock, raises corporate governance concerns for minority shareholders. While the insider commitment is a positive, the potential for reduced liquidity and limited minority influence suggests a 'hold' recommendation, advising investors to monitor governance developments and the impact of this concentrated control on future operational and financial performance before making further investment decisions.

Keywords

OceanPal Inc., Schedule 13D, Beneficial Ownership, Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Semiramis Paliou, Tuscany Shipping Corp., 4 Sweet Dreams S.A., Corporate Governance, Insider Ownership, SEC Filing, Shipping Industry