To help with oil spill cleanup expenses, BP is seeking short term loans

A short-term loan is good for unexpected expenses such as car repair, a crown at the dentist or a traffic ticket. But when you are responsible for the 2010 oil spill in the Gulf of Mexico, a short-term loan comes in handy — in spades. BP is talking to some banks to raise about $ 5 billion in short-term loans to help finance liabilities arising from the oil spill in the Gulf of Mexico, the Financial Times newspaper reported Thursday. By the end of last week BP had already raised about $ 20 billion in cash and credit to tackle costs from the spill.

Short-term loans are easy — unless you are BP

For most, getting a unsecured loans is easy. With just a little online research some fairly reasonable rates can be found, but if you run an oil business with a criminally negligent sales record that’s trying to buy its way out of an epic economic and environmental disaster it’s a little tougher. According to Investment Week, in seeking its $ 5 billion in short-term loans, BP is having to pay more than commonly charged by banks in margins and fees, people close to the transactions said. They noted that the banks are holding the cards in this deal. Soon, BP is bound to be desperate for cash. As the undersea gusher continues unabated, banks seem to be much more concerned over the potential size of BP’s liabilities — so they are going to hold the oil company over a barrel.

Payday cash being looked for by BP

A secured loans or a payday loan provides the cash till payday most individuals have to stop things like missing a credit card payment, preventing a bank overdraft fee, or simply getting the car out of the shop to get to work. BP has bigger issues on its hands. To solve it, it was reported by Reuters that BP is looking at various debt-financing opportunities, which consist of extending bank credit lines as much as $ 7 billion. Earlier this year, the oil spill company looked like they were considering a corporate bond offering and additional asset sales. But now those ideas are on hold. BP has said it has enough cash resources to meet oil spill cleanup costs without having to turn to these possibilities.

BP will need more than short term loan

For most people a short term loan or pay day loans for cash until payday loan solves their financial dilemma and they move on. BP costs are going to continue to mount higher. It was reported by the Street reports BP said this week the costs of cleaning up the oil spill in the Gulf of Mexico had reached $ 2.65 billion. This figure, which will continue to grow, is already more than $ 300 million more than it was estimated to be. On June 16, BP agreed with the Obama administration to create a $ 20 billion fund to compensate for the environmental and economic damage being wrought by the oil spill.

Debt management needs to be sought by BP

Nobody really seems to know if $ 20 billion can be enough money. As outlined by the Associated Press, on July 1 BP’s oil spill became the largest-ever Gulf of Mexico. Its damaged oil well has been pumping out oil for about two and a half months now, which has now surpassed the formerly record-setting 140 million gallons spilled by the Ixtoc I spill near Mexico’s coast from 1979 to 1980. It’s doubtful that BP’s short term loan strategy can be adequate to deal with the long-term debt that lies ahead for the Gulf of Mexico.

More info accessible at these web sites:

Investment week

investmentweek.co.uk/investment-week/news/1720119/bp-raise-funds-papers

Reuters

reuters.com/article/idUSTRE65G44C20100617?type=ousivMolt

The Street

thestreet.com/story/10796965/1/bp-in-short-term-finance-talks.html?cm_ven=GOOGLEFI