BP Rules Out Issuing New Shares

BP can meet the costs of its huge oil spill in the Gulf of Mexico without issuing new shares, the company said on Monday, rejecting recent speculation that it is seeking a bail-out from strategic investors, The Financial Times reports Tuesday. Well, the big banks said the same thing in 2007/2008.

“Our stock is cheap, why not buy some?”

Anonymous BP Official


The company has launched an appeal for support to Middle Eastern and other international investors, arguing that its shares are good value after their near-50 per cent fall since the Deepwater Horizon disaster on April 20, The Financial Times reports Tuesday.

However, BP has “no plans” to issue new equity to bring in a “cornerstone” shareholder, in the way that Abu Dhabi and Qatar supported Barclays Bank in 2008, according to the anonymous BP source.

An official from one of the Persian Gulf States told the Financial Times that BP had been reaching out to investment entities in the region, particularly those with which it already had relations.

The message, the official said, was: “Our stock is cheap, why not buy some?”

Something Familiar?

I guess that’s pretty much the same thing Bank of America CEO Ken Lewis and Citigroup CEO Vikram Pandit, UBS, Royal Bank of Scotland and all the other global banks told the big sovereign funds in the middle east and in Asia when they agreed to swap shares for billions in cash in late 2007/early 2008.

Abu Dhabi, the UAE’s capital, operates one of the world’s largest sovereign wealth funds, the Abu Dhabi Investment Authority, which invested $7.5bn in Citigroup in November 2007.

The Qatar Investment Authority has been one of the more active state investment vehicles in recent months, with a series of high-profile investments in UK property, including the acquisition of Harrods, the London department store.

In spite of the Arab an Asian funds heavy capital infusion – now almost two years ago – the banks are still in just as much trouble as before.

Bin Laden And Gadafi

BP has a particularly long history with the United Arab Emirates – home to several state-controlled funds – where it has operated since the 1930’s and is a partner in gas production and the development of power plants that can capture and store their carbon dioxide emissions, FT writes.

Libya’s top oil official on Monday said that his country’s sovereign wealth fund should invest in BP to take advantage of the troubled company’s weak share price.

Shokri Ghanem, chairman of Libya’s national oil company, made the comments as BP made contact with Middle Eastern investors.

“BP is interesting now with the price lower by half and I still have trust in BP. I will recommend it to the LIA [the Libyan Investment Authority],” Mr Ghanem told Dow Jones.

BP is also active in Libya, having won a big contract in 2007 to explore for gas and oil there. The LIA is seeking to build up its portfolio.

Shares in BP, which said the cost to date of the spill had risen above $3bn, closed 3.4 per cent higher at 333.3p in London.

It’s no secret that the big wealth fund in Qatar is build on money from (among others) the Bin Laden family, and in Libya we have Muammar al-Gaddafi who recently called for a “holy war” against Switzerland.

This crisis is making some strange connections.

No Special Care

Whitehall refused to confirm or deny a report in The Times that officials in the Treasury and Department of Business were discussing contingency plans in the event BP collapsed or was broken up.

“Nobody could expect us to comment on hypothetical contingency plans for any company or whether or not they existed,” the business department said.

The talks were said to focus on BP’s position as a generator of dividends for UK pension funds, as a big employer, as well as its role as an operator of key energy infrastructure, particularly in the North Sea.

BP said that there was no evidence of “any unusual government care”.

Of course not!

The company is only “an operator of key energy infrastructure”…..

Related by the Econotwist:

So, You Thought BP Was An OIL Company?

Response To The BP Derivatives Story

Mr. Rubin’s Still Rockin’ The House

Gulf Oil Spill: A Carefully Planned Inside Job?

Norway’s Oil Fund Among BP’s Largest Shareholders As Bankruptcy Rumors Hit Market

Oil Spill Makes Waves

BP Is Drowning In Its Own Oil Spill

Dockwise To Assist BP In Gulf Oil Spill Clean Up

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