BP rules out a share issue
BP yesterday dismissed speculation it will issue new shares in a bid to meet the spiralling costs of tackling its huge oil spill in the Gulf of Mexico.
A spokesman told City A.M. last night: “We welcome new shareholders or existing shareholders wanting to increase their shares, but there are no current plans to issue new equity.”
The denial came as reports suggested that the government is already drawing up contingency plans in case the company collapses. One possibility being mooted is whether the government should consider intervening to protect BP, which was a nationalised company until 1987.
Despite its problems including news yesterday that clean up costs have now reached £2bn, BP’s shares, which have fallen nearly 50 per cent since 20 April are attracting interest. “I think that BP shares are good value for bargain hunters,” said Shokri Ghanem, chairman of Libya’s National Oil Corporation yesterday.
Ghanem would not confirm whether one of Libya’s sovereign wealth funds, the Libyan Investment Authority (LIA), would make a move to buy up a stake, thought to be valued at £6bn.
His comments are on the back of speculation that similar wealthy state-owned funds in Abu Dhabi and Qatar could also be interested in backing BP.
Evgeny Solovyov, an analyst at Societe Generale, said: “[It would] provide protection
against an unfriendly takeover, possibly better access to Middle Eastern projects and
provide some confidence boost – there are still investors prepared to spend serious money on BP.”
Analysts have said it is unlikely that a move to swallow up a stake in BP will be made before the drilling of the relief well is completed. Drilling has now reached 17,725 ft.
Shares were up 3.51 per cent yesterday on the news and closed at 333.30p.
BP said drilling of the relief well has now reached 17,725 feetthe weekend, bringing it closer to eventually plugging the leak.
It is thought that once the spill is contained, BP’s board could take some drastic measures, including overhauling top management resulting in the potential exit of chief executive Tony Hayward and chairman Carl-Henric Svanberg.