BP Directors to Discuss Suspension of Dividends

BP Directors to Discuss Suspension of Dividends
By CLIFFORD KRAUSS
Copyright by The New York Times
Published: June 11, 2010
http://www.nytimes.com/2010/06/12/us/12spill.html?hpw


HOUSTON — BP said Friday that its board of directors would meet Monday to discuss whether to suspend the company’s dividend to pay spill-related claims.

BP executives continued to say they were financially capable of paying the dividend, which amounts to $10.5 billion a year. But they also acknowledged the political pressures building in Washington to set aside at least the next dividend payment while the amount of oil being released into the gulf is assessed and the growing federal fines linked to that amount can be estimated.

“There are ongoing discussions, there are lots of options on the table,” said Andrew Gowers, a BP spokesman. Among options being considered by board members, BP officials say, is suspending or cutting the dividend for a quarter, paying the dividend in shares of stock, or issuing an i.o.u. for delayed payment.

The BP board will discuss a strategy for a meeting between top company executives and President Obama on Wednesday. No decision is expected until then. By that time, the company hopes its containment efforts will be gathering most of the oil spilling into the gulf. Such progress could relieve some political pressure as well. Political controversy boiled on many fronts Friday as Attorney General Bill McCollum of Florida sent a letter to BP demanding that it put at least $2.5 billion into a dedicated escrow account to cover spill-related losses to the state and its residents. Mexico’s environment minister told Reuters that Mexico was considering how to sue BP for environmental damage if oil reaches the country’s shores.

BP’s efforts to contain the spill were the subject of debate at hearings in Washington on Friday. Robert J. Barham, the secretary of the Louisiana Department of Wildlife and Fisheries, told a House of Representatives subcommittee that chemical dispersants used underwater may be more environmentally damaging than the oil.

“As bad as it is, we have a whole lot more experience dealing with oil on the surface than we do in subsea, where we have literally no experience,” Mr. Barham said.

He said that despite repeated requests to BP and to the manufacturer of the dispersant, they have not received information on the percentages of the components of the chemical, Corexit.

John Williams, executive director of the Southern Shrimp Alliance, told the committee that the shrimping industry was angry over the continued use of the dispersants without proper knowledge of how the chemicals could affect seafood.

Jackie Calmes contributed reporting from Washington.