2011, Olam denied there were inaccuracies in its accounts after a CLSA analyst raised concerns about internal controls, citing multiple and sometimes significant differences between Olam's audited and unaudited statements.
Muddy Waters cites the 2011 CLSA note in its letter.
Olam has since increased its a) debt load by approximately S$900 million, b) cumulative investment cash burn by approximately S$2 billion ($1.63 billion), and c) cumulative operating cash burn by approximately S$500 million, the letter says.
Olam has $4.125 billion of outstanding debt, including bonds and loans, according to Thomson Reuters CreditViews. The bulk of its bonds are held by retail investors who can be quick to unload paper, making for volatile prices.
Olam's bonds were trading steady on Wednesday, but caution was still in the air as prices are off the levels prevailing before the Muddy Waters allegations.
The bonds due in 2017 were last seen at 93-94.5 cents on the dollar and 2020s were at 94.5-96, both recapturing more than half their losses at the previous day's lows. Before the allegations surfaced, the bonds were at 98 and 101, respectively.
The stock was up 2.5 percent at S$1.65 on Wednesday, losing part of its early bounce. The previous day it had fallen as much as 11 percent to S$1.545, its lowest in nearly six months. Olam's shares are down about 20 percent so far this year, while the benchmark Straits Times Index is up 12 percent.
Olam has grown from its origins in Nigeria into a diverse agricultural commodities trading company with interests ranging from cocoa and coffee to nuts and sugar.
Chief Executive Sunny Verghese has led an expansion that has seen it take on larger commodity players such as Noble Group and Wilmar International.
Muddy Waters may not be the only firm betting against Olam, which is the most borrowed stock among Singapore's top 30 companies, suggesting heavy demand from short sellers.
Nearly 80 percent of Olam's shares that can be borrowed were out on loan, compared with an average of about 6 percent for the index constituents, according to Markit Securities Finance.