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BP Hiring Four More Banks, Total Tally Now At Seven, Scrambles To Create Underwriting Syndicate
As previously reported, BP has already hired Goldman, Blackstone and Credit Suisse. Now Charlie Gasparino reports that the British firm is apparently in the process of hiring every single investment bank in existence: new banks rumored to be in contract negotiations include Morgan Stanley, HSBC, UBS and Standard Chartered. According to Charlie "they are being asked to somehow guarantee that they would lend money to the company." Another angle is that the firm is preempting any possible hostile takeover, by preventing any competitor firm from hiring any of these banks, which pretty much round out all the megabank firms that have a credible capital markets desk (sorry RBS), and thus make a hostile acquisition problematic. At least so far there has been no taxpayer capital going to BP, so retainer and success fees for the 7 banks, which will likely run into the hundreds of millions, will only be footed by BP's ever angrier shareholders.
More from Fox Business:
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: 136.66, -0.44, -0.32%), Credit Suisse (CS: 40.672, 0.192, 0.47%) and Blackstone (BX: 10.43, -0.22, -2.07%) as advisers, but it is in negotiations to bring aboard Morgan Stanley (MS: 25.48, -0.26, -1.01%), HSBC (HBC: 47.94, -0.04, -0.08%), UBS (UBS: 14.06, 0.26, 1.88%) 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 had no immediate comment. Officials at these 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.
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I hear Lehman and Bear Stearns are looking for work.
Damn, you beat me to it. Lehman was the first thing that came to mind.
They are hiring them to prevent a takeover and more importantly to prevent them from shorting them into bankrupcty and making a fortune. Furthermore they are hiring them to use their magic computers to defend their stock from short attacks.
You got their game plan. Plus the central bankers of US and UK will backstop the paper.
I love the smell of desperation in the morning.
BP sez: "Ya, take us down, copper. Myeah, the banks get it!"
Cop sez: "Where do you want to get shot BP?"
We sez: "Can we shot too?"
The crowd sez: "In the balls, please."
Brilliant, JM. Protection money to the banksters.
Absolutely correct, and there's also this; a very common tactic in divorces is to conduct initial interviews with all the best attorneys in your area before your (alientated) spouse can, thereby giving them enough information about the case such that they are prevented from opposing you in court.
I wonder, if the offering is being syndicated, will any of the banks be willing to sell aLCDS on 5x the offering for a price of previous days closing spread+100 bps.
Yeah ... I thought so.
Run back to jolly old england for the money ya ignorant wankers.
Grasso, Boesky, Milken, and Fuld, Llc has a widening hole in their calendar.
This is one F***ed up company. Apparently they think they can buy banksters.. Oh, that is funny. Goldman would take one look at their internals and sell them down the river with total impunity. This just proves one thing: the scum always floats to the surface.
Nah, they are hiving off BP Americas. First $20B into escrow might be cash, anything else will be shares of whatever they will call the new entity that is BP Americas.
Those EURUSD bullish warnings have
strengthened further today.
Vice versa for the USD index of course.
It seems the current EURUSD downleg has ended.
http://stockmarket618.wordpress.com
No matter how you look at this...there is going to be plenty of entertainment this summer. I already have my calendar synchronized with the Summer of 2008. We are going to stumble through the Summer and then blow up after Labor Day weekend.
That's my wager...
I bet CIBC World Markets would love to sell off BP since the initial IPO back in '87 nearly bankrupted the predecessor firm, Wood Gundy. But they are mere minnows in an ocean full of sharks.
"Credit Suisse estimates it might cost the company nearly $40 billion...."
CS may need to add another zero to that before this is all over
With CDS blowing out, I wonder if BP has been advised by Goldman to hold "insurance" against a credit event. Just burn the house down for the insurance money.
"At least so far there has been no taxpayer capital going to BP... "
I Smell a Cameron Back Door Gordon Brown Style Bailout!
Just call British Petroleum a bank or insurance company and have the Bank of England pick up the loses in secret courtesy of the British taxpayer...
It is done successfully in the States all the time...
Brilliant Tony!
After all British Petroleum did self insure Deep Water Horizon...
Looks like a brilliant bunch of AIG insurance executives to me...