4thUPDATE:BP Won't Issue New Equity To Cover Gulf Spill Costs

(Adds comment on shares held in treasury.) By James Herron Of DOW JONES NEWSWIRES LONDON (Dow Jones)--BP PLC (BP) killed speculation Tuesday that it was looking for a white knight investor to take a large equity stake in the company by saying it won't issue new equity to raise money to cover the costs of the oil spill in the Gulf of Mexico. BP would welcome it if any existing shareholders or new investors want to expand their holding in the company by buying already-listed shares, but no new shares will be listed, said a company spokeswoman. The statement helped lift BP shares. They closed up 12 pence, or 3.7%, at 346 pence, outpacing a 2.9% rise in London's FTSE 100 index. A number of press reports during the weekend said BP was courting sovereign wealth funds in the Middle East, which could buy new shares to raise an extra GBP6 billion in capital. BP's shares have lost almost half their value since the Deepwater Horizon explosion that triggered the oil spill April 20. Libya's top oil official, Shokri Ghanem, said Monday that BP is a bargain and recommended the nation's sovereign wealth fund invest in the oil giant. However, a member of Kuwait's top oil policy committee moved Tuesday to quell speculation his country would increase its stake in BP. "The investment authority in Kuwait already has a stake in BP and have lost a considerable amount on the book value," Imad Al Atiqi, a member of Kuwait's influential Supreme Petroleum Council, told Zawya Dow Jones. "I am not sure it's a good idea to raise the stake they already have in BP," he said. Analysts at Royal Bank of Scotland echoed Ghanem's view Tuesday. "We doubt that total direct and indirect costs of the spill to BP will be as large as currently discounted in its share price," the bank said, raising its recommendation on BP stock to "buy." BP's stock has the potential to rise 24% once the company makes greater progress shutting down the leaking well and cleaning up the remainder of the spilled oil, RBS said. The continuing oil spill from BP's Macondo well in the Gulf of Mexico has fouled beaches and marshes and damaged fishing and tourism industries. BP potentially faces tens of billions of dollars of liabilities mostly from compensation to people whose livelihoods have been damaged and financial penalties related to the Deepwater Horizon accident, RBS said. The company has already spent $3.12 billion on the cleanup, containment and compensation and has promised to pay another $20 billion into an independently-administered fund to cover future liabilities over the next 3 1/2 years. But BP won't sell any new shares--including shares bought back from investors and now held by the company, a spokesman said. BP on June 30 said 1.86 billion ordinary shares had been bought back and are held in treasury, and 112.8 million ordinary shares had been bought back for cancellation--all together just more than 10% of all shares. "These shares held in the treasury are treated the same as new shares," the spokesman said. BP has built up a substantial war chest to handle the spill costs. It had a prior $5.25 billion credit line available with a number of banks and, in a show of support since the oil spill, eight or nine banks have offered additional standby credit lines totaling $9 billion, according to a person familiar with the matter. BP also had $5 billion in cash on its balance sheet in early June, will save $7.8 billion through the cancellation of three quarterly dividends and will trim $2 billion from its capital expenditure this year. BP's plan to sell $10 billion of assets to boost its balance sheet could pay off quickly. Sky News reported last week that China National Offshore Oil Company (CEO) could buy BP's stake in Pan American Energy for around $9 billion within weeks. Company website: www.bp.com -By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjones.com (Tahani Karrar-Lewsley in Dubai contributed to this article.) (END) Dow Jones Newswires July 06, 2010 11:43 ET (15:43 GMT)