(Corrects 5th paragraph to state that 3 1/2 year low was hit on Wednesday, not Tuesday)
By Charmian Kok
SINGAPORE, Nov 28 (Reuters) - 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 investments.
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 March 2009.
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 investment plans.
"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 some reason."
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 www.muddywatersresearch.com/research/olam/initiating-coverage-ol am/
The Olam report is here (Additional reporting by Saeed Azhar; Editing by John O'Callaghan and Edmund Klamann)