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as of Sep2013, Muddy Waters was still posting articles attacking Olam

Perhaps this is Temasek's bid to drive Carson to the grave once and for all. Not sure if the bloke is still short, but the $2.23 is definitely much higher than the prices that MW was short from.

Seems to be a fair bit to pay while not intending to delist the counter, esp in view of how much it has ran up in past weeks. IMO.
Temasek tries to un-muddy Olam's waters

or get rid the monkey behind its back
14-03-2014 12:40:59
BREAKINGVIEWS-Temasek buyout throws sovereign weight behind Olam

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own) By Peter Thal Larsen HONG KONG, March 14 (Reuters Breakingviews) - Temasek is extending a protective arm around Olam . The Singapore state investor is leading a group which has offered to buy the 48 percent of the commodity trader it doesn't already own at a valuation of $4.3 billion. The buyout should help to shield Olam from sceptical short-sellers - and remove any doubts over its creditworthiness.

It's not the first time Temasek has come to Olam's aid. In December 2012, the group underwrote a $712 million convertible bond issue designed to see off short-sellers like Muddy Waters, which had challenged Olam's accounting. Yet despite Temasek's support, and a subsequent strategy overhaul designed to improve cash generation, Olam's valuation has lagged those of its listed peers.

For that reason, the consortium's S$2.23-a-share cash bid should find plenty of takers. The offer is only an 11.8 percent premium to Olam's most recent closing price, and comes after near-40 percent rally in recent months. But it's a price shareholders have not seen since the summer of 2012, when analysts started raising doubts about the company's soundness.

Besides, there's no prospect of a rival bid. The consortium says it wants to keep Olam as a listed company. But if it ends up with more than 90 percent of the shares, Singapore's stock exchange could cancel Olam's listing.

The most immediate beneficiary of the buyout is Olam's creditworthiness. Despite Temasek's minority shareholding, the company has faced persistent queries about its debt load. That's particularly damaging for a trading house like Olam, which relies on the confidence of its counterparties. In future, creditors will view Olam as an extension of its sovereign parent.

Short-sellers may insist that Olam would have been in trouble without Temasek's support. But that is precisely the point. By questioning Olam's accounting, Muddy Waters also challenged the authority of one of the world's largest investors. With assets of S$215 ($170) billion, Temasek's protective embrace is sufficient to fend off even the most determined attack. That's a lesson short-sellers will need to bear in mind when choosing future targets.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> CONTEXT NEWS - A consortium led by Temasek on March 14 offered to take full control of Olam in a cash deal that values the commodities trading firm at $4.3 billion.

- Breedens Investments, a subsidiary of the government-owned Singaporean investor, is offering S$2.23 for each Olam share in cash. The consortium, which includes Olam's management and its founding family, already controls 52.4 percent of the company.

- The offer is an 11.8 percent premium to Olam's closing share price on March 12, and a 24.2 percent premium to the volume-weighted average price of the shares over the previous month.

- The consortium has offered to buy Olam bonds which are convertible into shares at a price of S$2.98 per share. It will also offer to buy 397.8 million warrants at a price of S$0.646 each.

- The consortium said its intention was to maintain Olam's listing, but that it might be required to de-list the shares if its stake rose above 90 percent.

- "Breedens wishes to increase its shareholding to support Olam's strategy and growth plans for the long term," it said in a statement.

- Breakingviews TV: Temasek tries to un-muddy Olam's waters: - Temasek offer announcement (PDF): - Reuters: Temasek unit offers to buy Singapore's Olam, values firm at $4.3 bln [ID:nL3N0MA605] - Reuters: Temasek's pivot to private investment heralds billion-dollar listed asset sales [ID:nL3N0LP1FI] - For previous columns by the author, Reuters customers can click on [LARSEN/] (editing by Andy Mukherjee and Katrina Hamlin) (( ((Reuters messaging: Keywords: BREAKINGVIEWS TEMASEK OLAM

(14-03-2014, 12:41 PM)kbl Wrote: [ -> ]Temasek tries to un-muddy Olam's waters

or get rid the monkey behind its back
I am not vested in commodities because I don't understand the underlying assets. But is this a financially sound deal for Temasek? I hope it is not just foolhardy national service with our tax dollars.
Actually, quite cheap way to get a full company. CIC is planning to buy Noble's Agri Business at 1 Billion USD (About 1.3 Billion SGD). Temasek is paying SGD 4.4 billion for the entire company. Which means that the rest of the business is valued at just 3.3 billion. At its peak, Olam traded at 3.7 SGD a share, unadjusted for warrants etc. At 2.23, it is about 40% below peak. Plus, unlike Noble's business which is a loss making one, Olam's business is profit making. Plus, cleaner balance sheet. My guess is that this is a very good deal for Temasek, not so great for anybody who is vested at 3 or 3.5.
In fact it seems quite true that it is a lesson for muddy water and to earn back the national reputation..
(14-03-2014, 01:44 PM)Shrivathsa Wrote: [ -> ]Actually, quite cheap way to get a full company. CIC is planning to buy Noble's Agri Business at 1 Billion USD (About 1.3 Billion SGD). Temasek is paying SGD 4.4 billion for the entire company. Which means that the rest of the business is valued at just 3.3 billion.

Which is the rest of the business you are referring to?
A good re-read

Muddy Waters: Game over for Olam if Temasek pulls out

November 1, 2013 Leave a comment


Muddy Waters: Game over for Olam if Temasek pulls out


Mr Block: Had not foreseen Temasek moving in to support Olam, a move which he believes was driven by systemic considerations. - PHOTO: YEN MENG JIIN

[SINGAPORE] Almost a year after it first released its report on Olam International, shortselling research firm Muddy Waters is not letting up on the agri-commodities trader yet. ”My view is that if Temasek decides tomorrow that it wanted out of this investment, it would be game over within months for them, without Temasek’s backstop,” its research director Carson Block told The Business Times in his first visit to Singapore since launching its report against Olam last November.“For us, the be-all and end-all when we’re looking at Olam is free cashflow. It’s a company that seems to be in general wholly-incapable of generating free cash flow. It takes on more and more debt, and eventually, this debt has to be repaid.”

The shortseller had late last year accused Olam of relying on accounting tricks to boost its bottomline, spending too much on poor quality assets, and said it valued Olam on a “liquidation basis”.

The attack, the first of its kind in Singapore, caused Olam’s shares to fall 20 per cent to a low of $1.395 at the height of the saga, and subsequently led to an overhaul of Olam’s plans after a strategic review.

The firm said that it now aims to be free cashflow positive from the 2014 financial year onwards, a year earlier than its original target of FY2015, and has laid out plans to cut planned capital expenditure, monetise its balance sheet and divest certain assets.

Mr Block said of these: “The company’s saying the right things. The question is whether it actually does those things. It might have become slightly more selective, but you still see substantial cash burn in the company.”

“Maybe they can finance their way out of it, however many more times, but there will come a day – it might be sooner, it might be later – when the market will not be open to this company.”

In August, Olam reported a negative free cashflow of $316 million for the 2013 financial year, compared with negative $661 million a year before.

Olam’s net gearing now stands at 1.93 times, as compared to 2.20 times the previous quarter, and 1.81 times at the end of FY2012.

When asked if Muddy Waters still retains a short position on the firm, Mr Block said it does not usually comment on its positions aside from the release of its reports.

But in a hint that Muddy Waters is still short on Olam, he added: “Obviously we’re usually used to winning within a shorter period of time. Fortunately for many of the names we’ve shorted in the past, we haven’t really had to think to answer that question. Olam is different.”

Shares for Olam, and Muddy Waters’ target after that, US cellphone antenna operator American Towers, had not dropped as much as the shortseller’s earlier targets, leading to talk that its influence has faded.

In a sign that its streak of lacklustre results is ending, however, Muddy Waters’ latest report launched last Thursday against Chinese mobile services provider NQ Mobile led to its shares falling more than 60 per cent within an hour.

Temasek moving into the ring to support Olam was a move that the shortseller had not foreseen, Mr Block admitted.

“We looked at it from a purely economic standpoint, which is that it is not an investible company, and maybe we ignored the political elements of this, the psychological element, the issues that were more systemic in Singapore that could interest a sovereign in a bailout,” he said.

Two weeks after Muddy Waters spoke out against Olam, Temasek, then the firm’s second-largest shareholder, threw its weight behind Olam by agreeing not just to take up its pro-rata entitlement of Olam’s US$1.25 billion bonds-cum-warrants rights issue, but also sub-underwrite it. The issue was eventually 1.1 times subscribed.

Temasek has also since then progressively increased its ownership of Olam, from an initial 16.3 per cent before the Muddy Waters attack to 24.07 per cent now.

In Mr Block’s view, Temasek had stepped in because of the wider implications that an Olam collapse would have posed to the commodity-trading industry in Singapore.

“If Olam had failed, what would the banks have done with the other commodity houses that are borrowing in Singapore?” he said. “It’s reasonable to assume that if the banks had to write off losses to Olam, you could have a real funding freeze for the commodity trading industry in Singapore. “

Temasek’s spokesman Stephen Forshaw said the Singapore investment company’s reason for investing in Olam remained the same: “We have been, and remain, supportive of its publicly known strategy to take the opportunity, in recent years, to add on more upstream and midstream capabilities and capacities.

“We also acknowledged that no business is without risks. But that said, at the time of the investment, we were comfortable with Olam’s credit position and longer term prospects, and were very pleased to have another opportunity to invest in the company, alongside others.”

(01-11-2013, 09:11 AM)Behappyalways Wrote: [ -> ]Muddy Waters: Game over for Olam if Temasek pulls out
Maybe Carson block already closed out his position. i think with his connections he prob already received rumours of Temasek circling on Olam. it's obvious that the news leaked out for a month, one month IMO is enough for Carson block to run (if he hasn't)
(14-03-2014, 02:16 PM)egghead Wrote: [ -> ]
(14-03-2014, 01:44 PM)Shrivathsa Wrote: [ -> ]Actually, quite cheap way to get a full company. CIC is planning to buy Noble's Agri Business at 1 Billion USD (About 1.3 Billion SGD). Temasek is paying SGD 4.4 billion for the entire company. Which means that the rest of the business is valued at just 3.3 billion.

Which is the rest of the business you are referring to?

Industrial Raw Materials which generates 207 m EBITDA, if Edible Nuts, Spices & beans is the Agri business, it generates 309 M EBITDA, against Noble's amount which is smaller, even adding confectionery it is an additional 259, so, the raw materials piece, the food staples piece is 415 m, so all in all, 4.4 billion for a 1.2 billion EBITDA is a multiple of just 4 EV/EBITDA, when normally you would pay 10, so, as I see it it is a good deal