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Thread: BP Considering Suspension of Dividends

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    Re: BP Considering Suspension of Dividends

    As of today, BP's market cap is still $106 billion (and that's WITH the expected costs already factored in to the stock price). That's plenty to cover the expenses arising from the cleanup, and whatever incidental expenses they're legally required to pay. All of this talk about "poor BP, we need to help them profit so they can pay us back" is pure bull****. There is no question about their ability to pay whatever amount they might conceivably be required to pay. Do you people own stock in BP or something?
    Last edited by Kandahar; 06-11-10 at 11:01 PM.
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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by Kandahar View Post
    As of today, BP's market cap is still $106 billion. That's plenty to cover the expenses arising from the cleanup, and whatever incidental expenses they're legally required to pay. All of this talk about "poor BP, we need to help them profit so they can pay us back" is pure bull****. Do you people own stock in BP or something?
    And, you know all this, how?
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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by Kandahar View Post
    As of today, BP's market cap is still $106 billion. That's plenty to cover the expenses arising from the cleanup, and whatever incidental expenses they're legally required to pay. All of this talk about "poor BP, we need to help them profit so they can pay us back" is pure bull****. There is no question about their ability to pay whatever amount they might conceivably be required to pay. Do you people own stock in BP or something?
    Their "market cap" is not the same as how much they hold in liquid assets. They need cash on hand and liquid assets to pay these liabilities... their market cap is irrelevent to that fact, unless they are going to start selling other projects they have to cover the cost, which I highly doubt.

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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by NolaMan View Post
    BP is a large company no doubt, however in terms of liquid assets they do not have the reserve to pay off potential criminal liabilites or even the potential liabilities if they are found to be grossly negligent. It would be a smart move by BP to suspend dividends just to ensure they have as much liquidity as possible.

    Already BP will have problems getting credit from this point on, which will be another concern with their capability to pay, of if they can pay, develop new business.

    BP will probably survive, but it will be very expensive for them to do so. There are a lot of liabilities that we do not even think about at this point. For example, the government can sue BP (and others) to recover lost tax revenue from their own moratorium. That can potentially reach into the hundreds of millions, plus cost of clean up, plus all the liabilities from gross negligance (which they will probably be found guilty of), plus now this talk of making BP pay workers who are out of a job because of the government moratorium. It will be unknown the exact liabilities until the well is capped, because their potential liability is tied to how much oil has leaked. There is the potential for billions upon billions of dollars in liabilities. BP needs to hold the cash for now in my view.

    If I was a shareholder (and had not already dumped) I would be pleased to see them holding this money in an effort to get through this disaster.
    The BP decision on whether or not to pay dividends should be a purely business conclusion based on business criteria. Problem is that after some of the clever statements by Obama recently it has/will become a political decision on the part of BP. And the result will be that investors and fund owners are going to potentially suffer as a result....


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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by apdst View Post
    And, you know all this, how?
    Because the costs that investors ALREADY expect them to incur have been factored into the stock price. So that $106 billion market cap is the amount BP is worth, which they could potentially use to pay ADDITIONAL expenses, above and beyond what's already expected. The highest estimate for the TOTAL cost of the spill that I've seen is $14 billion...and let's not forget that BP's liability from incidental expenses is capped.

    Your "poor BP" schtick is completely transparent. Either you work in the oil industry or you own stock in the company. Which is it?
    Last edited by Kandahar; 06-11-10 at 11:10 PM.
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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by NolaMan View Post
    Their "market cap" is not the same as how much they hold in liquid assets. They need cash on hand and liquid assets to pay these liabilities... their market cap is irrelevent to that fact, unless they are going to start selling other projects they have to cover the cost, which I highly doubt.
    If they are legally required to pay the costs, they WILL start selling other projects, as they won't have a choice.
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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by Cole View Post
    The BP decision on whether or not to pay dividends should be a purely business conclusion based on business criteria. Problem is that after some of the clever statements by Obama recently it has/will become a political decision on the part of BP. And the result will be that investors and fund owners are going to potentially suffer as a result....
    .
    Seriously? BP is going to get hammered for years to come because of this. It is purely a business decision. They are going to have huge liability bills coming down the pipe, and they need all the cash on hand they can get.

    Which is better? Investors lose a dividend, or BP cannot meet its obligations and sells other money making projects, borrows, or fails in an effort to meet these obligations. All of those are worse for the shareholder than losing some divdends.

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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by Kandahar View Post
    If they are legally required to pay the costs, they WILL start selling other projects, as they won't have a choice.
    Doubt it. They would probably just spin off the US division, or declare Chapter 11 bankruptcy.

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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by NolaMan View Post
    Seriously? BP is going to get hammered for years to come because of this. It is purely a business decision. They are going to have huge liability bills coming down the pipe, and they need all the cash on hand they can get.

    Which is better? Investors lose a dividend, or BP cannot meet its obligations and sells other money making projects, borrows, or fails in an effort to meet these obligations. All of those are worse for the shareholder than losing some divdends.
    Don't know what the BP board is going to decide. But if you don't think that the political implications/ramifications of any decision will be part of the discussion, believe you are being naive.....



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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by Cole View Post
    Don't know what the BP board is going to decide. But if you don't think that the political implications/ramifications of any decision will be part of the discussion, believe you are being naive.....

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    I am sure they will think about the political impact, I would hope they are already doing so, but they still need to focus on the issue of available cash, which suspending a dividend would do.

    Depending on what they think the overall cost would be, and their cash on hand, that will be ultimate factor. If I was on the board, I would vote to suspend the dividend.

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