BP Plc is on a bankers buying spree, offering several large financial
institutions lucrative roles as advisers on financing deals in exchange
for guarantees that they will help the firm raise money in a pinch, FOX
Business has learned.
The troubled oil giant has already hired Goldman Sachs , Credit Suisse and Blackstone as advisers, but it is in negotiations
to bring aboard Morgan Stanley , HSBC , UBS and Asian bank Standard
Charter. People at the firm say the sticking point is that they are
being asked to somehow guarantee that they would lend money to the
company.
BP Plc (BP) is on a bankers buying spree, offering several large financial institutions lucrative roles as advisers on financing deals in exchange for guarantees that they will help the firm raise money in a pinch, FOX Business has learned.
The troubled oil giant has already hired Goldman Sachs (GS), Credit Suisse (CS) and Blackstone (BX)
as advisers, but it is in negotiations to bring aboard Morgan Stanley (MS),
HSBC (HBC), UBS (UBS)
and Asian bank Standard Charter. People at the firm say the sticking point is that they are being asked to somehow guarantee
that they would lend money to the company.
A BP spokesman declined to comment on the company's relationship with its banks, and officials at those firms also had no comment.
Underwriters are often asked to provide multiple financing arrangements, but U.S.
securities laws prohibit underwriters “tying” of various assignments,
meaning they cannot offer to make bank loans in exchange for being
hired as an investment advisor. However, the companies themselves can
demand access to bank lines of credit in exchange for hiring on other
assignments, which appears to be the case here.
For BP, however, the access to cash is important for its survival. The massive spill in the Gulf of Mexico and its potential financial impact – Credit Suisse estimates it might cost the company nearly $40 billion—has raised the possibility that the
firm might have to file for bankruptcy protection. It has already agreed to a demand from president Obama to set aside $20
billion to cover liabilities stemming from the oil spill.
It’s unclear how BP will raise money to pay for the claims. Sources say it
may issue billions of dollars of bonds in the coming weeks as well as
tap bank lines, or do a combination of both. People at the firms say
they haven’t agreed to BP’s terms just yet.
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