Olam International

Believe their bankers are paying close attention to them, if credit lines are tighten, life will be tough.

(27-11-2012, 09:57 PM)corydorus Wrote: Will the next crisis be caused by commodity ....?

unlikely due to plunge of commodity price. commodity is very liquid, the price correct itself much faster than property.

If there is a crisis caused by commodity, probably due to the rise of commodity price. not enough commodity can be produced to keep pace with consumption.

Never knew the proper pronunciation of the name but after reading the report, it sounds more Ol-am than O-lam!

Olam asked for another trading halt.

Muddy Waters report (133 pages) download URL:
http://www.muddywatersresearch.com/resea...rage-olam/

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A Singapore blogger wrote a blog on Olam six days ago titled 'Olamak!' , and it is worth reading:
http://8percentpa.blogspot.sg/2012/11/olamak.html

45-page rebuttal from Olam. All-out war!

http://info.sgx.com/webcoranncatth.nsf/V...4000B68A2/$file/OlamRespondstoMW-ReportFindings_28Nov2012.pdf?openelement

i would hazard a guess that the CEO wont be working much these few days, his eyes would be fixed on olam's stock price, refreshing his laptop or ipad every few mintues.. haha must deduct his salary

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perhaps the CEO can do a further share buyback to prove the financial sturdiness of the company

Wow, these people must have worked overnight (literally)!

I hardly even had time to browse through HALF of Muddy Waters' 133-page report and now there is a rebuttal filled with 45 pages. Imagine if Carson Block came up with some other stuff worth who knows how many more pages with charts/tables. Gee.

All out war indeed.....

(28-11-2012, 11:43 AM)money Wrote: perhaps the CEO can do a further share buyback to prove the financial sturdiness of the company

Share buyback, as a signal, is just a temporal attempt to make things "look right". You need to buy a significant amount to create confidence yet on the other hand, this can be a self-fulfilling prophecy as it weaken the ability for Olam to pay down its interests.

As of 1QFY13, Olam has a gross cash of S$1.4bln. At current share price of S$1.55, they can transact for a max gross amount of around 890mln shares - representing 37% of outstanding common shares.

However, this is the cap and the amount will drop significantly given that Olam needs the cash to finance working capital and pay down interest payments. The latter is more important given the accusations of being overleveraged.

IMO, if the business is stable, then the CEO has nothing to worry but if that's the case, Olam won't even find itself in the current position. It is because Olam is dependent on creditor's confidence that they are frantically trying to disprove Muddy Waters' accusations.

For cash on share buyback you have to look at company level which is still sizable $947m.

Olam needs sizable working capital. That's how we should look at the ROIC. I think the business is real but problem is the leverage in this business to generate ROE, so yes they are at the mercy of creditors. And hence credibility is paramount.