(Corrects 5th paragraph to state that 3 1/2 year low was hit on
Wednesday, not Tuesday)
By Charmian Kok
SINGAPORE Nov 28 Singapore commodities firm
Olam International Ltd launched a vigorous defence on
Wednesday against short-seller Muddy Waters' attacks on its
accounting practices and acquisitions, emphasising it is not at
risk of insolvency.
Olam, 16 percent owned by Singapore state investor Temasek
Holdings Pte Ltd, said in a 45-page report it has
enough liquidity to pursue its current business and future
The rebuttal focused on major issues raised by Muddy Waters
in its own report: Olam's solvency, accounting-related
assertions, business model, acquisitions and capital spending.
"We believe that the report's assertions are motivated to
distract and create panic amongst our continuing shareholders,
bond holders and creditors," Olam said in a statement.
Olam shares plunged 6 percent on Tuesday and extended the
losses on Wednesday. At 0319 GMT, they were down 1.9 percent at
S$1.53, off the intra-day low of S$1.465, their lowest since
Muddy Waters, which rose to prominence after attacks on
North America-listed Chinese companies, made allegations about
irregularities and vulnerabilities at Olam last week and
released its detailed report on Tuesday.
The battle between the two firms, which Olam has escalated
to a Singapore court, has cast a spotlight on common accounting
practices at commodities firms.
Olam said it has planned for an "appropriate" capital
structure and raised the necessary equity and debt to meet its
"We believe that even without raising any further debt we
can easily meet our debt repayment obligations and pursue our
planned capex (capital expenditure), in addition to meeting the
on-going working capital needs," it said.
"We also have the option of phasing out some of our fixed
capital investments if the debt markets completely dry up for
Olam said gains generated from accounting for negative
goodwill in certain acquisitions are treated as "exceptional"
and are excluded when reporting core operational profits.
CIMB analyst Lee Wen Ching said the Muddy Waters report
provided sensational headlines but little new information.
"We think this report exaggerates the negatives, most of
which are already known by the market, rather than bringing up
new concerns," she said.
Olam, started by the Kewalram Chanrai Group in Nigeria,
began as a trader of agricultural commodities with interests
ranging from cocoa and coffee to nuts and sugar.
It has been diversifying into new areas in recent years
through acquisitions and now owns plantations and processing
plants around the world.
The Muddy Waters report is at
The Olam report is here
(Additional reporting by Saeed Azhar; Editing by John
O'Callaghan and Edmund Klamann)