BP prepares to sell bonds for first time since spill
Tuesday, September 28, 2010; 11:06 PM
BP plans to sell bonds for the first time since the oil spill in the Gulf of Mexico sent its stock price sinking, and some reports said the company might seek to raise as much as $3.5 billion.
Despite the massive cost of the spill, BP does not need to borrow money to make payments to the $20 billion escrow fund it has agreed to create to meet economic and environmental claims. But now that the worst-case scenarios about the spill have failed to materialize, it is BP's best opportunity in months to raise new funds.
"This is an extra cushion; it is not required by any means," said Alex Morris, an oil analyst at the investment firm of Raymond James. Morris said that BP has $22 billion in debt, relatively modest for a company that size and one with vast assets it can sell.
BP also received good news on the legal front this month.
The oil spill had prompted some plaintiffs to urge a federal court judge to revoke probation that had been placed on BP as a result of the 2005 Texas City refinery explosion. In August, BP paid a $50 million fine to the Occupational Safety and Health Administration for violations at the refinery. The probation expires in March 2012.
But in early September, Daniel W. Dooher, senior trial lawyer in the Justice Department's environmental crimes section, wrote letters to Texas District Court Judge Lee H. Rosenthal saying that Justice was not seeking revocation or extension of BP's probation.