Olam launches defence against Muddy Waters allegations
Olam, 16 percent owned by Singapore state investor Temasek Holdings Pte Ltd, said in a 45-page report it has enough liquidity to pursue its current business and future investments.
The rebuttal focused on major issues raised by Muddy Waters in its own report: Olam's solvency, accounting-related assertions, business model, acquisitions and capital spending.
We believe that the report's assertions are motivated to distract and create panic amongst our continuing shareholders, bond holders and creditors, Olam said in a statement.
Olam shares plunged 6 percent on Tuesday and extended the losses on Wednesday. At 0319 GMT, they were down 1.9 percent at S$1.53, off the intra-day low of S$1.465, their lowest since March 2009.
Muddy Waters, which rose to prominence after attacks on North America-listed Chinese companies, made allegations about irregularities and vulnerabilities at Olam last week and released its detailed report on Tuesday.
The battle between the two firms, which Olam has escalated to a Singapore court, has cast a spotlight on common accounting practices at commodities firms.
Olam said it has planned for an appropriate capital structure and raised the necessary equity and debt to meet its investment plans.
We believe that even without raising any further debt we can easily meet our debt repayment obligations and pursue our planned capex (capital expenditure), in addition to meeting the on-going working capital needs, it said.
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