A short-term loan comes in handy for numerous individuals for unexpected expenses like 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 raise about $ 5 billion in short-term loans to help finance liabilities arising from the oil spill in the Gulf of Mexico, the Financial Times newspaper reported Thursday. By the end of last week BP had raised $ 20 billion in cash and credit to tackle costs from the spill, as outlined by the report.
Resource for this article: BP looks for short-term loan to cover costs in oil spill cleanup by Personal Money Store
Short term loans are easy to figure out, unless you are BP
Usually, getting a unsecured loans is easy. With a little online research some quite reasonable rates could be found, but if you run an oil company with a criminally negligent sales record and are trying to buy your way out of an environmental disaster, it’s a little tougher. It was reported by Investment Week that in seeking its $ 5 billion in short-term loans, BP is having to pay more than commonly charged by banks in margins and fees, people close to the transactions said. In this deal, the banks are the ones holding the cards. Soon, BP is bound to be desperate for cash. As the gusher continues to spill, banks have grown more concerned over the potential size of BP’s liabilities — so they will hold the oil business over a barrel.
Cash until payday being looked for by BP
A unsecured personal loans or a pay day provides the cash now most individuals need to prevent credit difficulties 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, Reuters reports that BP is looking at various debt-financing opportunities, which consist of extending bank credit lines as much as $ 7 billion. Earlier this year, the oil spill business had considered a corporate bond offering and additional asset sales. Those ideas are on hold for the moment. BP has said it has enough cash resources to meet oil spill cleanup costs without having to turn to these opportunities.
more than a unsecured loans is needed by BP
For most people a quick unsecured loans or pay day for instant cash loans solves their financial dilemma and they move on. BP's costs will get bigger. According to the Street, BP said this week the costs of cleaning up the oil spill in the Gulf of Mexico had reached $ 2.65 billion. This figure, which will continue to grow, is already more than $ 300 million more than it was estimated to be. On June 16, BP agreed with the Obama administration to create a $ 20 billion fund to compensate for the environmental and economic damage being wrought by the oil spill.
Debt management needs to be sought by BP
Nobody really seems to know if $ 20 billion will be enough money. The Associated Press reports that on July 1 BP’s oil spill became the largest-ever within the Gulf of Mexico. Its damaged oil well has been pumping out oil for about two and a half months now, which has 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 is highly unlikely that BP’s short term loan strategy will be adequate to deal with the long-term debt that lies ahead for the Gulf of Mexico.
Citations:
Investment week
investmentweek.co.uk/investment-week/news/1720119/bp-raise-funds-papers
Reuters
reuters.com/article/idUSTRE65G44C20100617?type=ousivMolt
The Street
thestreet.com/story/10796965/1/bp-in-short-term-finance-talks.html?cm_ven=GOOGLEFI
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