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If you find yourself lost at sea, and assuming you don’t have the ability to send a distress signal to the US Coast Guard, exposure to the elements can lead to delusions. And that circumstance might tempt you to consider taking a small sip of the vast waters that surround you.
However, the kidneys impose a cruel irony on this choice. If you drink seawater, your bloodstream will contain excess salt. To remove this surplus, the kidneys remove the salt through liquefied waste, which then leads to dehydration. Therefore, the best option is to pray for rain, or perhaps to fish and eat a fish, which will provide less salty liquids.
Sure enough, the folks behind the upcoming spin-off of OceanPal Inc. It could give off more Sunday revival vibes than a soon-to-be-public corporation. On the one hand, the debut could not have come at a better time. A newly formed subsidiary under the dry bulk transportation giant Diana Shipping Inc. (NYSE: DSX), OceanPal can certainly take advantage of the explosion of interest in global supply chains.
But on the other hand, the worsening of the COVID-19 pandemic, specifically the omicron variant, threatens to cause a dark and thunderous cloud in the proceedings.
When is OceanPal’s IPO date?
Unlike a traditional initial public offering (IPO), OceanPal’s market debut does not represent the first time the company will go public. While the company is a newly formed subsidiary, technically, the asset reallocation comprises the spin-off previously negotiated under Diana Shipping. Therefore, instead of having an official entry on the IPO calendar, OceanPal has a distribution date of November 29, 2021.
In a corporate press release on November 24, Diana Shipping’s management team disclosed the date, having filed a registration statement for the OceanPal entity under Form 20-F with the U.S. Securities and Exchange Commission. (SEC). The shares will be traded on the Nasdaq market under the symbol OP.
During the second half of October, management disclosed the details of the spin-off, which mainly involves Diana Shipping, which contributes 3 of the company’s oldest dry bulk vessels. OceanPal will then act as the holding company for the vessels in question.
Additionally, Diana will provide an initial working capital of $ 1 million to the subsidiary. The shareholders of the parent company as of October 29, 2021 will collectively receive all the ordinary shares of OP. Diana will retain her influence with OceanPal as she will obtain the preferred shares of the subsidiary, which will entitle the parent organization to certain preferred dividends and voting rights.
Regarding the transaction, Diana Shipping CEO Semiramis Paliou stated that the spin-off “represents a significant return of value to our shareholders, reflecting the company’s ability to capitalize on the strong dry bulk market.”
In addition, Paliou believes that “the distribution of a separate, dry-bulk, publicly traded company, focusing on older vessels with shorter charters, will further enhance shareholder value by providing greater exposure to the charter market to short term, while allowing Diana Shipping to continue to focus on its disciplined long-term managed growth. “
As mentioned above, OceanPal’s “spiritual” IPO comes at an awkward time. Had it been the distribution of shares of a previously private shipping company, the debut probably would have found mixed sentiment. Undoubtedly, phenomena such as retail revenge have triggered the demand for freight transport, and all components of the global supply chain are apparently willing to pay a premium.
However, if the worst fears of the omicron variant were to materialize, the implicit threat would not only affect OP’s actions. In fact, Wall Street offered its own big discount on Black Friday, although it was not intended.
OceanPal Financial History
Because OceanPal is a newly formed entity, it is difficult to determine the future financial path of the company. Furthermore, all eyes are on the omicron variant and specifically how international government agencies will respond to the potential threat. Obviously, if sovereign nations feel pressured to close their borders, that would directly affect the global economy, particularly consumer confidence, which had previously been overwhelmed by pent-up demand.
Still, investors should note that infectious disease experts have yet to determine how dangerous the new variant really is. According to a report from Science.org, laboratory tests and spread patterns will allow researchers to gather key information. But that could take weeks, leaving everyone in a state of suspense.
Furthermore, it is not unreasonable for investors to have an optimistic view of the current COVID-19 crisis. From a recent Reuters In this article, a doctor from South Africa, the country where experts first identified an omicron-related case, stated that patients with the new strain experienced mild symptoms and could be treated at home.
Also, if the omicron variant were more transmissible but less deadly, it could be a blessing in disguise. That’s because omicron could become the dominant strain of the SARS-CoV-2 virus, ironically killing the deadliest delta variant.
Therefore, assuming a moderately positive best-case scenario, OceanPal is likely to offer an attractive tax return. Mainly, despite the pessimistic stories dominating the headlines and the airwaves, consumers around the world who have had enough lockdowns and mitigation measures are ready to spend. So it’s not the demand-side image that needs a tweak, but rather the supply and logistics component.
In addition, the supply chain delay is very likely to affect society for much of 2022. With retailers urging consumers to buy their products as quickly and as early as possible, the implicit message is that no one knows when. this crisis will occur within a crisis. end. Cynically, this frustrating development fits favorably with OP’s actions.
Also, let’s not forget that this unprecedented demand profile will likely drive OceanPal’s profitability. For example, Diana Shipping’s operating income for the fiscal year to date is $ 31.4 million, a clearly advantageous result compared to an operating loss of $ 7.2 million in 2020.
Another factor to consider, as long as the omicron variant doesn’t send the global economy into a tailspin, is the huge war chest that American consumers have amassed. In an October 2021 article from Bloomberg, the publication stated that American households collectively saved money to the tune of $ 2.7 trillion.
Since social behaviors and patterns don’t change overnight, those funds are likely to move somewhere within the economy. In theory, such a scenario will likely drive demand, which is already at a very high level, so it bodes well for OP stocks and the shipping industry in general.
However, at least a significant part of OceanPal’s potential lies outside the areas of influence under administrative control. If the omicron threat gets out of hand, retail sales and demand for goods and raw materials could drop dramatically, likely to negatively affect OP’s stock.
Even if omicron is not the apocalyptic danger that some fear it may be, COVID-19 cases are on the rise in many parts of the US Going back to the shipwreck analogy, investors should wait before determining whether the surrounding water it is salty or fresh.
How to buy OceanPal IPO (OP) shares
As a spin-off rather than a true IPO, investors who are not yet entitled to OceanPal shares must acquire the equity unit at the opening, which is easy if you already know how to buy shares. If not, follow the steps below.
Step 1: choose a broker.
Any reputable brokerage will allow you to buy OP shares. So, take the time to research which best brokers are directly suited to your needs.
Step 2: decide how many shares you want to share.
While OP stocks are not technically an IPO, they still carry the same risks of the unknown. So protect yourself with a balanced share count if you decide to go into the spin-off.
Step 3: choose your type of order.
Before investing, learn these market concepts.
- Bidding: The buyer’s best offer for a share.
- Ask for: The lowest acceptable seller price.
- Spread: The difference between the bid and ask price, the spread indicates market risk, as this is also the profit margin for market makers.
- Limited order: Requests to buy or sell at a predetermined price, limit orders provide transparency but not guarantees of execution.
- Market order: Market orders guarantee fulfillment, but only at the current rate.
- Stop loss order: Stop loss orders automatically exit your position at a predetermined price or somewhat lower.
- Stop-limit order: Stop-limit orders only leave positions at a specific price, but they also carry default risks.
Step 4: Run your trade.
Follow these steps to execute a market order:
- Select your type of action (buy or sell).
- Enter the shares you want to buy (or sell).
- Press the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your strike price).
OP restrictions for retail investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. If you have inside information (not public), even if it is simply the appearance of such, it is best to avoid taking the opportunity.
Only true IPOs are eligible for pre-IPO opportunities. However, for upcoming public market debuts, you may want to consider platforms like EquityZen, which allows you to apply to acquire shares in select companies at their initial offering price.
Drift in ambiguous waters
In the absence of the COVID-19 pandemic, the buildup of demand for various goods and commodities should be a massive tailwind for OP stocks. However, many uncertainties await clarification regarding the omicron variant, which may slow down OceanPal’s public market debut.
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