Quantcast

SOUTHEAST TEXAS RECORD

Friday, March 29, 2024

bp dividends

HOUSTON � Pressure from President Barack Obama and members of Congress caused BP to cancel a dividend payment after the Deepwater Horizon explosion, according to a suit seeking to restore $750 million for some shareholders.

Robert R. Glenn of Oregon claims BP could have afforded a dividend but chose not to pay it because the president, senators and representatives criticized it.

BP found itself under attack from politicians in the United States who did not like the look of BP paying a dividend to its shareholders, even though it was a debt BP was legally obligated to pay," five Portland lawyers wrote for Glenn.

"Despite having the financial ability and legal obligation to pay the dividend, BP chose political expediency over its obligations," they wrote.

"Hundreds of thousands of shareholders, and millions more investors in mutual and pension funds, relied on the BP dividends as part of their financial security and retirement income," they wrote.

BP has paid dividends on ordinary shares every year since 1917, according to Glenn's complaint.

Glenn proposes a class action for all who held BP's "American depositary shares," simple six packs of ordinary shares, as of May 7, 2010.

On Sept. 20, BP asked U. S. District Judge Keith Ellison to dismiss the suit or ship it to England.

Five days earlier, Ellison ruled that shareholders seeking recovery from directors on behalf of the company must take their suit to the English High Court.

Ellison presides over national shareholder suits by appointment of the U. S. Judicial Panel on Multi District Litigation.

The panel transferred Glenn's suit to Ellison in August, four months after he filed it at federal court in Eugene, Ore. Steve Larson, of Stoll Stoll Berne Lotking & Shlachter, signed the complaint. Keith Ketterling, Jennifer Wagner and Jacob Gill, of the same firm, also worked on it.

They wrote that on April 27, 2010, BP announced a first quarter dividend of 84 cents per American depositary share, payable on June 21.

They claim that on June 2, two senators issued a letter urging BP to delay any payment.

According to the complaint, a press release from the senators suggested that going forward with it would invite scrutiny by the Justice Department. Over the next week, dozens of representatives signed a letter urging BP to halt the payout and cancel its advertising.

They wrote that on June 4, Obama said, "There are reports that BP will be paying ten point five billion, that's billion with a B, in dividend payments this quarter."

When BP spends that kind of money on shareholders, the complaint states, the president said he didn't want to hear that they nickeled and dimed fishermen and small businesses.

"On June 16, 2010, following a meeting with President Obama, BP announced that it had cancelled the previously declared first quarter dividend."

They wrote, "The declaration and announcement of the dividend created a binding obligation on the part of BP to pay the dividend on June 21, 2010."

They couldn't give the exact number of American depositary shareholders as of May 7, 2010, but wrote that there were more than 830,000 as of Dec. 31, 2009.

They wrote that for the full year, BP lost less than $3.8 billion despite taking a charge of $40.9 billion related to the explosion.

Thomas Taylor, of Andrews Kurth in Houston, answered that BP suspended an interim dividend, not a final one.

He wrote that final dividends require shareholder approval and interim dividends don't.

He wrote that directors of an English company may rescind an interim dividend at any time before payment and shareholders may not challenge that exercise of judgment.

He wrote that on June 16, 2010, BP directors announced that they would create a $20 billion claims fund and review their dividend policy as a consequence.

When directors cancelled the dividend, Taylor wrote, they stated that "it is right and prudent to take a conservative financial position given the current uncertainty over the extent and timing of costs and liabilities relating to the spill."

He wrote that the complaint was silent as to which law governs BP's obligation to pay.

As an alternative to dismissing Glenn's claim outright, Taylor proposed dismissing it in favor of a more convenient forum in England.

He wrote, "England has the greatest interest in this action."

On Sept. 15, Ellison deferred to English jurisdiction over common law derivative claims against BP directors.

Claims under U. S. securities and pension laws remain pending before him.

ORGANIZATIONS IN THIS STORY

More News