Release date: 6 November 2011
On 5 November 2011, BP received from Bridas Corporation a notice of termination of the agreement for their purchase of BP's 60 per cent interest in Pan American Energy LLC (PAE). As a result of Bridas Corporation’s decision and action, the share purchase agreement governing this transaction, originally agreed on 28 November 2010, has been terminated.
The closing of this transaction had been delayed because the Argentine anti-trust and Chinese regulatory approvals required to satisfy the conditions precedent to closing of the transaction had not been obtained by Bridas Corporation. Under the terms of the agreement, Bridas Corporation had exclusive responsibility for obtaining these approvals.
As a result of Bridas Corporation’s termination of the agreement, BP will now repay the deposit for the transaction of $3.53 billion received at the end of 2010. This deposit had been held by BP as short-term debt and will be repaid by 14 November 2011. This repayment will not affect BP's level of gearing, which stood at 19 per cent at the end of September.
PAE is a strong business. As a result of Bridas Corporation's decision to terminate, BP is no longer in discussions with them regarding this transaction. BP is happy to return to long term ownership of these valuable assets, given the considerable improvement in its own financial strength and circumstances, as well as the improved external trading environment.
In November 2010 and under different circumstances from those at present, BP agreed the sale of its interest in PAE as an early element of its divestment programme to strengthen its balance sheet. Since June 2010, excluding the PAE assets, BP has agreed asset sales totalling over $19 billion. As reported in its third quarter 2011 results, at the end of September 2011, BP held $18 billion in cash.
In October 2011, BP announced that it intended to extend its divestment programme to $45 billion by the end of 2013. BP’s current divestment programme is focussed on the sale of non-strategic assets and not driven by a requirement to raise cash. As such, BP does not currently plan to divest additional assets to offset proceeds which would have been received from the PAE transaction.
BP press office, London, +44 (0) 20 7496 4078, firstname.lastname@example.org