A short-term loan is good for unexpected expenditures like car repair, a crown at the dentist or a traffic ticket. But when you are the culprit in the 2010 oil spill within the Gulf of Mexico, a short-term loan will always in handy. Oil giant BP is talking with banks to make an effort to somehow raise $ 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 already raised about $ 20 billion in cash and credit to tackle costs from the spill.
Source for this article: BP looks for short-term loan to cover costs in oil spill cleanup by Personal Money Store
Unsecured loans tend to be easy except with BP
For most, getting a short term personal loanis easy. With online research reasonable rates could be found, but if you run an oil company with a criminally negligent sales record that’s trying to purchase its way out of an epic economic and 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. 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 seem to be much more concerned over the potential size of BP’s liabilities — so they will hold the oil business over a barrel.
BP wants instant cash
A short term loans or a paydayloans provides the instant cash most individuals have 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. BP has bigger issues on its hands. To solve it, it was reported by Reuters that BP is looking at various debt-financing opportunities, which include 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.
BP will need more than quick unsecured loans
For most people, getting a unsecured loans or pay day for instant loans solves all of their financial dilemma and they move on. BP costs are likely to continue to mount higher. The Street reports that 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 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 debt management
Nobody knows if $ 20 billion can be enough. As outlined by the Associated Press, 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 can be adequate to deal with the long-term debt that lies ahead for the Gulf of Mexico.
Discover more about this topic here:
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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