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No Late Surge of Interest in Central Bank’s Offer

January 7, 1988

LONDON (AP) _ There was no mad rush by investors to sell their new British Petroleum Co. PLC shares to the Bank of England before the central bank’s offer to buy them back expired Wednesday afternoon, the bank said.

Investors tendered only a ″very modest proportion″ of the 2.19 billion new BP shares to the central bank before the deadline, said a bank spokesman who was not identified, in accordance with British practice.

Active buying of the shares by the Kuwaiti government in recent weeks and a rally in oil shares generally in recent days have lifted the market price of the new shares well above the central bank’s offered price.

The central bank’s offer to buy the new shares at 70 pence, or $1.26 each, was designed to support the price of the newly issued shares in the wake of the October stock markets crash.

The new shares rose 4 pence to finish at 76 pence, or $1.37, on the London Stock Exchange on Wednesday.

An October sale of the government’s remaining 31.5 percent stake in the oil giant, plus additional shares to raise funds for the company, was a flop with investors because of the crash. The float had a total face value of 7.2 billion pounds, or $13 billion.

Those who did buy the shares paid a first installment of 120 pence, or $2.16 dollars, for each under a three-installment plan.

While the exact number of shares submitted under the buyback won’t be known for several days, ″there is no sign at all of a late surge of interest″ in the offer,″ the spokesman said.

BP’s regular, fully paid shares gained 1 penny, or 1.8 cents, to 264 pence, or $4.75.

The central bank was likely to end up buying no more than 1 percent to 2 percent of BP’s shares under its buyback offer, analysts said.

″It will be a great success because they won’t buy any back,″ said Jeremy Elden, an analyst at the London investment firm Phillips and Drew Ltd., said of the buyback.

Volume in the partly paid shares was more than 100 million shares on Wednesday. Much of the volume appeared to reflect further purchases by the Kuwaiti government through its London-based investment vehicle, the Kuwait Investment Office, analysts said.

The office has disclosed that, as of Monday, it owned 1.1 billion partly paid shares or 18.35 percent of all of BP’s stock.

The new share issue represented 36.7 percent of BP’s stock.