Muddy Waters letter blasts Olam debt
Shares of Olam rose as much as 5.6 percent on Wednesday, rebounding from a 7.5 percent fall the previous day. Olam bond prices briefly rose too, as traders and analysts said the letter was not as scathing as previous, formal research reports issued by the well-known short-seller.
The detailed report is still not out yet, said a Singapore trader about Olam's stock rebound. The trader was not authorised to speak publicly. It is unclear if Muddy Waters will publish a formal report on Olam or not.
The tussle began on Monday, when Muddy Waters founder Carson Block was speaking at a charity event in London. Block singled out Olam's accounting practices, saying his firm was unable to reconcile the company's capital expenditures with its announced projects, and questioned its prospects.
Muddy Waters, which makes money by betting against companies, has issued devastating reports in the last few years, mainly aimed at China-based companies. Some of the reports crushed shares of the targets, although others were able to recover.
Olam responded on Tuesday with a strong defence of its business, assuring that it could fund operations for 18 months even if it were shut out of the debt markets, and promising to consider share buybacks after the drop in its stock price.
Muddy Waters said in its letter, dated Nov. 20 and published on the research portion
Be the first to comment.