Friday, June 11, 2010

can the u.s. punish bp's shareholders?

NYTimes | Spewing oil and alienating Americans with its chief executive’s impolitic remarks, BP may be Public Enemy No. 1 in the United States. But in Britain, where the company is a mainstay of the stock market and a favorite of pension funds, investors and politicians are becoming increasingly angry at the blistering attacks from across the Atlantic.

BP’s share price, even after recovering some ground in New York trading on Thursday, has fallen more than 40 percent since the environmental catastrophe in April, and some analysts say the crisis could lead to the takeover or even the bankruptcy of one of Britain’s most valuable and iconic companies.

In that atmosphere, the stream of condemnations from Washington has stirred a protective backlash, even in this closest of American allies. Boris Johnson, the Conservative mayor of London, said Thursday that he was worried about “anti-British rhetoric” and “name-calling” from American politicians.

“When you consider the huge exposure of British pension funds to BP, it starts to become a matter of national concern if a great British company is being continually beaten up on the airwaves,” Mr. Johnson told BBC radio’s Today program.

Prime Minister David Cameron refused to criticize the United States, however, saying he sympathized with its “frustration” in dealing with its worst environmental disaster in memory. But the chancellor of the Exchequer, George Osborne, signaled careful support for BP, saying that he had spoken to its chief executive, Tony Hayward, and that it was important to remember “the economic value BP brings to people in Britain and America.”

BP is the third largest oil company in the world, after ExxonMobil and Royal Dutch Shell, with 80,000 employees worldwide as of last December, sales of $239 billion in 2009 and a market value — even after the recent losses — of more than $100 billion. At a time when Britain is desperate to reduce its deficit, BP is a huge contributor to British tax revenue, paying nearly $1.4 billion in taxes on its profits last year.

Its reputation for reliability and its generous dividends have long made it a favorite of British pension funds. The company’s dividend payments accounted for about 13 percent of the dividends handed out by British companies last year, according to FairPensions, a London-based charity.

Some Britons are irked at President Obama’s seeming determination to refer to the company as “British Petroleum” — even though it jettisoned that name in favor of initials years ago. In any case, they point out, it is truly a multinational company, traded on both the New York and London stock exchanges, with British and American nationals on its board of directors.

BP also has extensive holdings in the United States. It merged with Amoco, the former Standard Oil of Indiana, in 1998, and about 40 percent of its shares are held by American investors. It owns a refinery in Texas City, Tex., that is one of the world’s largest, and a 50 percent interest in the Trans Alaska Pipeline, in addition to a huge gasoline marketing operation.

But alarms went off in Britain when President Obama said earlier this week that he would have fired Mr. Hayward, BP’s chief executive, if Mr. Hayward worked for him and that he was looking for “whose ass to kick” in connection with the disaster. The Justice Department did not help matters when it said Wednesday that it was planning to take action to force BP to withhold its next dividend payment.