BP Cleanup Costs Soar, UK Stocks Fall

Arthi Gupta
19 Jul, 2010
New York City

The UK indexes fall and Tomkins received a takeover proposal. Moody''s downgrades the Ireland sovereign debt on bleak growth outlook. The UK home prices decline in July and retail sales soar in London in June. BP oil spill clean-up costs rise to $3.95 billion.

[R]4:00 PM London – The UK indexes fall and Tomkins received a takeover proposal. Moody''s downgrades the Ireland sovereign debt on bleak growth outlook. The UK home prices decline in July and retail sales soar in London in June. BP oil spill clean-up costs rise to $3.95 billion.[/R]

UK stocks declined following the weakness in commodities markets and sideways trading in the U.S. Europe markets edged higher.

In London FTSE 100 Index traded lower 21.69 or 0.42% to 5,139.16 and the pound edged lower to close at $1.5288.

Tomkins plc confirmed that it received a proposal from a consortium comprising the Onex Corporation and the Canada Pension Plan Investment board to purchase the company at 325 pence cash per share.

The board has considered the proposal terms and has allowed the consortium to conduct due diligence on the company, which is currently at an advanced stage.

International Power and GDF Suez SA renewed negotiations for a combination of certain assets.

International ratings agency Moody''s has downgraded the Republic of Ireland''s sovereign debt rating citing a worsening in the public finance situation and weak growth prospects. It cut the rating by one notch to Aa2 from Aa1.

The agency however raised its outlook on the ratings of Ireland''s debt to stable from negative as it sees upside and downside risks to be broadly balanced.

""Today''s downgrade is primarily driven by the Irish government''s gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability,"" said Dietmar Hornung, Moody''s lead analyst for Ireland. The general government debt-to-GDP ratio was at 64% at the end of 2009, up from 25% pre-crisis, and is continuing to rise.

Moody''s also downgraded the Republic''s National Asset Management Agency, formed to take control of toxic assets, to Aa2 from Aa1.

""While we do not expect the government to incur permanent losses in excess of 25% of the country''s 2009 GDP as a result of these obligations, we believe the uncertainty surrounding final losses would exert additional pressure on the government''s financial strength,"" Moody''s said.

The average asking price for a home in England and Wales dropped for the first time this year in July, according to reports from a property Web site.

The online company Rightmove reported that asking prices for English and Welsh homes fell 0.6% month-on-month in July, following a 0.3% increase in the previous month. The average price of a home now stands at £236,332.

Retail sales in central London surged ahead in June, according to a new survey.

The British Retail Consortium - KPMG survey found London retail sales rising 14.4% on a like-for-like basis in June compared to a year ago - the strongest sales growth since October 2006. This compares to a 1.2% like-for-like increase in the UK as a whole.

""These are impressive results,"" said Stephen Robertson, director general of BRC. ""Customers in the capital are less pessimistic than the rest of the UK and significantly less so than this time last year.""

Ireland is becoming more attractive to foreign investors with relatively low tax rates and sufficient investor protection, according to a report released by the Irish Business and Employers Confederation.

The report said that Ireland is ranked the third in Europe by the World Bank in terms of ease of doing business. In addition, the country was ranked fourth in the world in terms of availability of skilled labor by the 2010 IMD World Competitiveness Yearbook.

BP today provided an update on developments in the response to the MC252 oil well incident in the Gulf of Mexico.

The Helix Producer is expected to be available to resume capturing oil and flaring gas through the recently installed floating riser system. It has the capacity to capture about 20,000 - 25,000 b/d of oil.

Plans continue for additional containment capacity and flexibility that are expected to ultimately increase recoverable oil volumes to 60,000 to 80,000 barrels per day. To date, the total volume of oil collected or flared by the containment systems is around 826,800 barrels.

The first relief well has approached its last casing end point and, following the casing set, additional ranging runs will be used to guide the drill bit to a MC252 well intercept point.

About 43,100 personnel, over 6,470 vessels and dozens of aircraft are engaged in the response effort, BP added.

BP Plc said today that the cost of response for the Gulf of Mexico oil spill has reached $3.95 billion to date.

The Board of International Power announced that it is in preliminary discussions with GDF Suez SA regarding a possible combination of International Power and GDF Suez’s Energy International Business Areas and certain assets in the UK and Turkey to create an enlarged International Power which would be listed in London.

The Board of International Power believes that the possible combination warrants consideration given the strategic rationale and potential for synergies as a result of the combination and discussions are continuing between the two parties regarding the terms of the proposed combination.

If the combination were to be completed, it is expected that shares in International Power would be issued to GDF Suez and that, as a result, GDF Suez would be the majority shareholder in the enlarged International Power.