Wednesday, July 7, 2010

BP looking to get short term loan to cover oil spill cleanup costs

A short-term loan is good for unexpected expenses such as car repair, a crown at the dentist or a traffic ticket. But when you’re the culprit within the 2010 oil spill within the Gulf of Mexico, a short-term loan comes in handy — in spades. Oil giant BP is talking with banks to try to somehow raise $ 5 billion in short-term loans to help finance liabilities arising from the oil spill within the Gulf of Mexico, the Financial Times newspaper reported Thursday. By the end of last week BP had already raised about $ 20 billion in cash and credit to tackle costs from the spill.

Source of article: BP looks for short-term loan to cover costs in oil spill cleanup by Personal Money Store

Quick unsecured loans are easy to figure out, unless you are BP

For most, getting a quick unsecured loansis easy. With just a little online research some fairly reasonable rates can be found, but if you run an oil business with a criminally negligent sales record and are trying to purchase your way out of an environmental disaster, it’s a little tougher. As outlined by Investment Week, in seeking its $ 5 billion in short-term loans, BP is having to pay more than commonly charged by banks in margins and fees, individuals close to the transactions said. They noted that the banks are holding the cards in this deal. BP, regardless of how big and rich it has become, will soon be desperate for cash. As the undersea gusher continues unabated, banks have grown more concerned over the potential size of BP’s liabilities — so they are going to hold the oil company over a barrel.

Cash til payday loan being looked for by BP

A unsecured loans, also called a pay day loans, provides the cash loan most people need to prevent credit problems like missing a credit card payment, preventing a bank overdraft fee, or simply getting the car out of the shop to get to work. But BP surely has a bigger problem on its hands. To solve it, it was reported by Reuters that BP is looking at various debt-financing possibilities, which consist of extending bank credit lines as much as $ 7 billion. The oil spill company had considered a corporate bond offering and additional asset sales. But those ideas are on hold for now. Although it is trying to get some short-term loans, BP has said it has enough cash resources to meet oil spill cleanup costs without having to resort to these options.

more than a secured loans is needed by BP

For most individuals a quick unsecured loans or pay day loan for cash now solves their financial dilemma and they move on. BP costs are likely to continue to mount higher. It was reported by the Street reports BP said this week the costs of cleaning up the oil spill in the Gulf of Mexico had reached $ 2.65 billion. This figure is already more than $ 300 million more than its estimate from the week before. On June 16, BP agreed with the Obama administration to create a $ 20 billion fund to compensate for the economic damage being wrought by the oil spill.

BP needs to find a way to get debt management

Nobody really seems to know if $ 20 billion can be enough money. It was reported by the Associated Press that on July 1 BP’s oil spill became the largest-ever in the Gulf of Mexico. Its broken oil well has been gushing out oil for about two and a half months now, surpassed the formerly record-setting 140 million gallons spilled by the Ixtoc I spill near Mexico’s coast from 1979 to 1980. It’s doubtful that BP’s short term loan strategy could be adequate to deal with the long-term debt that lies ahead for the Gulf of Mexico.

More info about this topic at these websites:

Investment week


The Street

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