BP May Suspend Shareholder Dividends
[Guest post by DRJ]
BP’s directors will meet Monday to decide whether to issue its quarterly dividend, followed by a meeting Wednesday between BP executives and President Obama:
“BP directors will meet on Monday to discuss whether to suspend dividends to shareholders, the BBC has learned.”
BP’s 10 largest shareholders represent interests from around the world, including a Los Angeles investment group. Many shareholders are British pensioners but there are a significant number of American investors, too, including the Southeastern Pennsylvania Transportation Authority (SEPTA) that runs Philadelphia’s transit system and has already sued BP.
Not paying this dividend may help BP’s image in the President’s eyes (and inflate Obama’s view of his power), but it won’t help the retired pensioners who depend on dividends to pay their bills. It won’t do much for U.S.-British relations, either.
— DRJ
Yeah, but supplicating to Teh Won sure will make them look a little bit less mean & greedy to the eyes of the world, won’t it? Besides, then those pensioners can rightly demand more payouts from the socialist state.
Icy Texan (ba698c) — 6/11/2010 @ 1:51 pmThis is a matter of finance and business beyond my knowledge, but I will offer up the questions and concerns I have so that others may add good information.
1. It is generally wise to save for anticipated expenses (governments are not always wise, snicker), so on one hand I understand the thought that says they should not empty themselves of liquid assets (no pun intended, but I guess its there anyway) when they are going to have a big payout.
But, if they have a commitment to their shareholders and they can pay the dividend and still meet their oil spill obligation (even if they have to finance it), then paying the dividend seems appropriate.
I imagine for all involved, whether it be US companies and individuals affected by the spill or shareholders of the company in Britain and elsewhere, not burdening the company to the point of financial collapse is important.
Does BP itself have insurance (that it regularly pays for) that will help with their liabilities in this, or are they “self-insured”, or?
MD in Philly (5a98ff) — 6/11/2010 @ 2:16 pmI can remember a time when, came Hell or High-water, GM paid a $0.25 quarterly dividend. When they didn’t, people started to dump the stock, and the price tanked, and there was hell to pay.
AD - RtR/OS! (d6c711) — 6/11/2010 @ 2:44 pmPelosi has been agitating for this, too — apparently as unaware as Obama that state pension and investment funds hold tens of millions of BP shares.
Karl (f07e38) — 6/11/2010 @ 2:45 pmWhat do they care, none of them are invested in BP.
AD - RtR/OS! (d6c711) — 6/11/2010 @ 2:48 pmOnly “little people” buy stock in Big-Oil.
He doesn’t care, as he looks down his nose, he doesn’t give a flying god damn about anyone but himself. This two bit sack of shit is the epitome of the conflation of the “peter principle” and affirmative action. He has never earned anything ,has never had to work for anything, and shows the experience and skill set as a consequence. Those whom voted for this ignorant fool should pay an interminal penance for their assinine choice.
Edward Lunny (ca0e48) — 6/11/2010 @ 2:54 pmIt will be interesting to see how this plays out amoung the punditry and the swells in the MSM. My guess it will be all roses for BO, how powerful he is, thoughful, holding their feet to the fire, etc. They will uses this to help BO look decisive and in control. Far from the truth, but good enough for the DNC media shills.
BT (74cbec) — 6/11/2010 @ 3:11 pmThis makes about as much sense as trying to make BP pay for the lost jobs resulting from the political decision to put a moratorium on drilling, and the idea that limits of liability really don’t matter, and should be raised by $9,000,000,000+ after the fact. Barcky and his gang of clowns should be embarassed by their incompetence.
JD (59a6eb) — 6/11/2010 @ 3:11 pmBecause BP’s price has been driven down, you’re looking at a current dividend yield of 10%. That’s juicy, but too much risk of div cutoff or even bankruptcy. Might be a good time to buy an oil sector _fund_ though. The industry isn’t going away, not until the last barrel is pumped.
gp (3f5b43) — 6/11/2010 @ 3:11 pmOne more example, as if any more were needed, that BO knows how to campaign but not how to govern.
Stu707 (0981d5) — 6/11/2010 @ 3:20 pmThe problem with an all-out attack on BP, as opposed to the similar one 21 years ago after the Exxon Valdez, is that the oil company’s defenders aren’t just free-market conservative Republicans and Libertarians, who the Democrats don’t care anyway. It’s the people in Great Britain and the British government itself. Attack Exxon and the battle is almost 100 percent domestic. Attack BP — especially with the idea of bankrupting it or nationzlizing its U.S. assets — and you get into international disputes, and possible retaliation against American interests overseas.
John (d4490d) — 6/11/2010 @ 4:49 pmBP is getting bitten by the dog they chose to lay down with and I can not seem to muster the least sniveling bit of concern for the position they find themselves in.
They picked a side, they aligned themselves with Teh Won and his agenda both with their personal and corporate money and their collective efforts.
Let them own it, let them live with it, let them die by it…
Damn them…Damn them all to hell…
Seize them, drain them, break them, burn them to the ground and sink their remains over the hole of their demise.
It would be worth it to teach others a lesson in politics…choose wisely, and not choosing is the wisest choice of all.
MJN1957 (6e1275) — 6/11/2010 @ 5:17 pmDemocrat politicians don’t understand economics or finance. If BP projects their cash flow can meet the dividend, there is no reason not to pay it.
If the U.S. is threatening to make them put up a bond or cash now for the cleanup costs, I’d like to hear about it.
daleyrocks (1d0d98) — 6/11/2010 @ 5:47 pmIf BP doesn’t pay its dividends, current shareholders may sell their shares to buy a better stock and potential shareholders may decide not to buy at all. Thus, ironically, this may make it harder for BP to satisfy future claims.
DRJ (d43dcd) — 6/11/2010 @ 6:07 pm“Thus, ironically, this may make it harder for BP to satisfy future claims.”
DRJ – Only is they need to sell stock to raise cash to pay the claims. If their basic business is making money, operating cash flow and borrowings may be able to take care of it. Claims typically don’t get paid all in one year.
daleyrocks (1d0d98) — 6/11/2010 @ 6:13 pmWhat would really get the Dem’s knickers in a knot is if BP announced a major stock buyback program Monday because the directors decided the company’s stock was so undervalued because of the bad press coverage relative to its underlying business fundamentals. Heads would be exploding!
daleyrocks (1d0d98) — 6/11/2010 @ 11:09 pmBP announced that the dividend would be put into an escrow account pending the ongoing cap & clean-up in the Gulf.
AD - RtR/OS! (d6c711) — 6/12/2010 @ 12:52 amThey have the money, the money belongs to their shareholders, its payment doesn’t jeopardize BP’s financial status, but the PR of making the payment at this time is not good. So, it goes into escrow to be released at a later date.