Olam International

[l0nEr]

As discussed previously, Temasek has drawn the line. And assuming there's no fraud, Olam can improve cash flow just by reducing working capital, which seems to be what they are doing.

MW is toast.

But the more interesting observation remains: are the warrants a cost to the company? or a cost to the shareholders since it is now in the money? Heretic but finance 101 may not be the answer.

completely agree, MW doesnt have that much valid points. They seem to be shooting very qualitative factors now, like over very petty small immaterial items.
But the Gabon issue could be one to watch...

MW is not toasted, they will remain an overhang. People are still quite 'scared' whenever they issue a report, like the stock dipped immediately after the report was released. That said, effect seemed to have diminished.

In accounting terms, no the warrants are not a cost to the company/shareholders. The money raised from the debt/warrant will be allocated into bonds payable and warrants (equity), respectively. According to IFRS (and SFRS), the amount will be determined by computing the fair value of the bond (typically by comparing to how existing bonds are trading at), then allocating the residual amount into warrant (equity). So if everything is done properly, there would be an enlarged debt and enlarged equity. Whether the warrant is in the money doesnt matter, coz only the RESIDUAL amount will be allocated to the warrant (i.e. its not fair valued).
With regards to cost for investors, its probably reflected in the ROE due to the enlarged equity base. There will not be any expenses reflected in the P&L statement.