BP: No Plans to Issue Shares to Fund Oil Cleanup
BP PLC said Tuesday it has no plans to issue new shares to help pay for the Gulf of Mexico oil spill, giving its shares a further boost amid rumors of interest from sovereign wealth funds.
BP spokesman Mark Salt said that BP "is always happy to welcome new shareholders or existing shareholders who wish to increase their shareholdings, but there's no current plans to issue new equity to anyone."
The company's statement is good news for investors whose own holdings would be diluted by a larger stock base.
Special Section: Disaster in the Gulf
Recent reports have suggested that a number of Middle East sovereign wealth funds are considering purchasing a stake in BP, helping calm fears of a full takeover. BP declined to comment on "market rumor and speculation."
Shares in the company were trading 2.7 percent higher at 342.35 pence ($5.20) in afternoon trade on the London Stock Exchange.
Many analysts view the stock, which had at one point since the spill lost $100 billion in market value, as oversold.
Royal Bank of Scotland on Tuesday upgraded the stock to "buy" from "hold", setting a target price of 455 pence.
"Our base case scenario is significantly less pessimistic and in our view, the risk/reward profile of the shares is currently favourable," RBS analysts said in a note.
They said that the operation of relief wells, due to occur around the middle of this month, will be a turning point for BP's shares.
"Stopping the flow of oil will cap the physical volume of the spill, reduce the daily costs being incurred, cool the political temperature and, if BP's share price remains excessively depressed, it could trigger credible merger speculation," they said.
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