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Those who specilize in shorting will loves OLAM no matter what.
Short sellers are having a break today ?
Personally think that Olam is pretty much a victim, although it is not entirely innocent. The stock is currently stuck in a negative loop, which is also part of muddy Waters strategy, and is likely to de-rate in the near term.

Interesting analysis on the issue.

On the 3rd point for the issuance of the debt. Somehow I suspect that Temasek always intended to keep the bond issuance for itself. Not because of self interest... The bond if issued will probably be traded in the market as a retail bond. The government aka Temasek has to need to make sure what reaches the masses is safe and easy to know, so as to avoid having another mini bond saga. This is probably a reason why the current sgx retail traded bonds only have safer companies. In contrast, Olam isn't even rated.
Another sign is that Olam is quite an institutional stock, with participation with many fund houses. However most of these funds only have an equity mandate, which will stop them from taking up the bonds and hence rights issue. If that's the case, they can either sell off their Olam stock now (which could be the case now) or they can not take up the rights issue. Either way, Temasek takes up the bond issue.

On the banks credit lines.
I don't exactly think they are withdrawn although they tend to be uncommitted lines. I find it more likely that the banks demand a higher collateral and/or interest rates. As most of the current collateral is over the inventory, which is being questioned now, it is reasonable that this is the case. From Olam point of view, they could either get support from Temasek via debt or equity issuance. Clearly, debt support is a better method from the point of view of equity holders. So why get bank support when you can raise debt from Temasek and get double benefits.

On the order of events.
If sunny knew about the bond or rights issue before the bond/rights idea came out, he could be liable for insider trading for buying shares before the announcement of the plan. I somehow managed to hear the 2nd conference call and noticed that the presenter was unaware that sunny has said earlier that the bond was the bank's idea. He maintained that the bond was Olams idea, which is why the company subsequently published the announcement clarifying the order of events. Perhaps sunny never knew about it? Or he simply phrased himself wrongly. What he hear now is all written by the media, we aren't able to hear sunnys exact words. Not able to understand the circumstances that sunny said those statements.

One of the brokers draw parallel to Warren Buffett bailout of Goldman Sachs during the crisis with a 10% bond. There is a confidence premium in this new bond, which should not be directly compared to other existing bonds. Btw, all the Olam bonds fell in yesterday trading. The sgd perpetual trades at 75/80 now. Super wide bid ask spread and the yield is high. Bloomberg places it at 15%, though I'm not sure how to calculate that.
Some has termed it as a false breakdown.. hence possibly explaining why share price stopped falling (for now).
Today Olam is a 过街老鼠, But may turn a favorite tomorrow. All depend on what the positions of the hedge funds take.
After building up their long positions , they will say high leverage is good for Olam's expansion plan, management is capable of taping funds from capital market to expand market share....... praise Olam to the sky and offload.
Olam Not Similar to Failed Enron, Says Ex-Temasek Director
By Michelle Yun & Rishaad Salamat - Dec 7, 2012 11:00 AM GMT+0800
Expect more of such reversed statement when they are ready. Smile
There is an interesting article in this week's THE EDGE magazine on an interview with Carson Block. Worth a read. Also he mentioned that he is done finding companies to short in China and now turns his attention to Singapore and rest of Asia. anyone want to speculate who is his next target in SGX list. I think Ezra could be a target.fortunately i don't have any counter that is in the multi-billion cap or has high gearing. so safe for me.
The Straits Times
Published on Dec 08, 2012
'Olam is not another Enron'

Firm just moved too fast, too far: Ex-Temasek exec

OLAM International, the commodity trader that Muddy Waters said may fail, isn't another Enron Corp, according to a former senior managing director at Temasek Holdings.

"I completely reject" the Enron comparison made by Muddy Waters, Mr Michael Dee, who worked at Temasek from 2008 to 2010, said in an interview with Mr Rishaad Salamat on Bloomberg Television's On The Move Asia yesterday.

"(Olam is) a company that saw a tremendous business opportunity, to take an existing platform and grow it on the back of relatively inexpensive debt. And perhaps executed that a little bit too fast and too far," Mr Dee said.

Shares in Olam, the world's second-largest rice trader, have slumped 16 per cent since Muddy Waters' founder, Mr Carson Block, first made his allegations on Nov 19.

Olam has responded with a lawsuit against the research firm and Mr Block, and a plan to sell as much as US$1.25 billion (S$1.53 billion) of bonds and warrants to address "lingering doubts", according to Olam chief executive officer Sunny Verghese.

"In the short term, they need to de-lever the company," Mr Dee said. "I do think that is doable and is not overly difficult."

The stock rose one cent to $1.46 yesterday morning. Its US$500 million of 5.75 per cent notes due were quoted at 87.2 cents on the dollar in mid-morning trade, up from 86.7 cents yesterday, according to Bloomberg prices.

Olam said this week it will offer US$750 million in bonds and up to US$500 million in warrants to existing shareholders, and Temasek, its second-largest shareholder, agreed to buy any rights not taken up by other investors. Temasek holds a 16 per cent stake in Olam, according to data compiled by Bloomberg.

"Excluding the costs of the warrants attached to the bonds, the yield will be about 13 per cent instead of the 8 per cent that Olam would like investors to believe," Mr Dee said on Thursday in a separate interview. "The marketplace hasn't really understood what the real costs for the company are."

As part of a 10-point plan for Olam, Mr Dee, in a Business Times report on Thursday, called for the company to sell stock instead of issuing bonds, saying "the supply of cheap debt is over".

He reiterated that Olam needs to reduce debt, "take a breather from rapid expansion" and be more transparent.

The company has already stated its rationale for the bond sale, Mr Aditya Renjen, Olam's general manager of investor relations, had said in response to questions about Mr Dee's comments. "The objective from our perspective was to have something in both equity as well as debt, and for the benefit of our long-term continuing shareholders."

Enron, once the world's largest energy trader, plunged into bankruptcy in December 2001 following revelations it was using off-balance-sheet vehicles to hide billions of dollars in losses and inflate its share price. More than 5,000 Enron employees were fired and about US$1 billion in retirement money was lost.

"Views and opinions expressed by former Temasek employees and management do not represent the views of Temasek; even if those former employees are identified as former employees," Temasek said in a statement on its website.

Mr Block should not have waited so long to release his 133-page report, in which he rated Olam a strong sell, after he first raised doubts about the company at a hedge fund conference last month, Mr Dee said. Other than that, Mr Block is providing a service to investors and offering "a wake-up call for the company and board".

The former Temasek director says he would now wait for a plan of action from Olam. "I would like to see them have a holistic response from a business strategy to the current situation and to accept the new reality," Mr Dee said yesterday.