Olam International

[arthur]

I have not been following Muddy Waters closely but does anyone knows if Sino-Forest, Focus Media or past defendants issued such counter reports like Olam did before?

[Curiousparty]

I agree with Muddy Water's assessment that Olam will not have positive cashflow until AT LEAST 2015!!

A Big Sell!!!

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SINGAPORE - Religare Capital Markets downgraded Olam International Ltd to 'sell' from 'buy' and cut its target price to S$1.40 from S$2.40, as it expects the commodity trader's shares to be weighed down by concerns raised by short-seller Muddy Waters.

By 0426 GMT, Olam shares were down 0.96 per cent at S$1.55, off an intraday low of S$1.465, which was a three-and-a-half year low. Its shares have plummeted 27.5 per cent since the start of the year, compared with a 13.5 per cent rise in the Straits Times Index.

"Olam shares will face difficulty re-rating upwards and sustaining even a moderate earnings multiple for the next few quarters, even if the financial risks Muddy Waters warns of don't materialize," Religare said in a note.

The brokerage noted Olam's guidance that it won't be generating positive free cash flow until 2015, making it hard for the company to completely dispel the concerns raised. - REUTERS

[Stocker]

He should walk the talk by buying shares from open market with own money.

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This Mr.Block is well connected in the Jewish financial community, not easy for Olam.

[money]

Are you all aware that in the month of jun 2012, our dear olam bought back a total of 52,196,000 shares (around 2.14% of the company) with prices between 1.6-1.9, so that will cost a minimum of 80 million? Since it has negative cashflow, it has been borrowing money to buy back its supposedly cheap & undervalued shares!

http://info.sgx.com/webcorannc.nsf/Annou...endocument

[Musicwhiz]

Are you all aware that in the month of jun 2012, our dear olam bought back a total of 52,196,000 shares (around 2.14% of the company) with prices between 1.6-1.9, so that will cost a minimum of 80 million? Since it has negative cashflow, it has been borrowing money to buy back its supposedly cheap & undervalued shares!

http://info.sgx.com/webcorannc.nsf/Annou...endocument

Interesting, thanks.

Then again there are companies out there borrowing money to pay dividends too.

[Stocker]

MAS flags risks from rising corporate debt

SINGAPORE: The Monetary Authority of Singapore (MAS) has warned that bad loans at banks may increase if the economy sours.

It said companies are more leveraged today than they were a year ago, and while balance sheets remain strong, profitability has dropped in line with weakening economic conditions.

"If economic conditions worsen or interest rates rise from current low levels, bank loan quality could deteriorate substantially," the MAS said in its annual Financial Stability Review.

The central bank noted that companies "appear well able to cover their interest expense".

But, the MAS said this could change if rates rise significantly.

[l0nEr]

Are you all aware that in the month of jun 2012, our dear olam bought back a total of 52,196,000 shares (around 2.14% of the company) with prices between 1.6-1.9, so that will cost a minimum of 80 million? Since it has negative cashflow, it has been borrowing money to buy back its supposedly cheap & undervalued shares!

http://info.sgx.com/webcorannc.nsf/Annou...endocument

Thats different. Instead of using Olam to buy back the shares (risking all the shareholders money at it), why isnt Kewalram Chanrai Group (KC Group) buying back shares??? If im not wrong, the management is from the KC Group. Think it says more with they themselves buying back, as compared to raising the already-high leverage of the company. (particularly if they think it is undervalued, why not?) Shrewed traders...

[godjira1]

Are you all aware that in the month of jun 2012, our dear olam bought back a total of 52,196,000 shares (around 2.14% of the company) with prices between 1.6-1.9, so that will cost a minimum of 80 million? Since it has negative cashflow, it has been borrowing money to buy back its supposedly cheap & undervalued shares!

http://info.sgx.com/webcorannc.nsf/Annou...endocument

Interesting, thanks.

Then again there are companies out there borrowing money to pay dividends too.

I find this fascinating. Surely existing debt holders will kpkb as it makes them worst off?

[Musicwhiz]

Depends. Companies borrow money (sometimes huge sums) to finance expansion and growth; creditors and bondholders would not see that their money is specifically being used to finance dividend payments - there is no direct correlation.

Essentially, what I am saying is that for some companies (not talking about Olam, just a general observation), their business model requires large capex and a lot of reliance on debt, yet they can pay out a small dividend. So the inference is that they borrow to pay dividends.

Hope this explains.

[ValueBeliever]

i fear the worse for Olam is yet to come. Muddy reputation vs. Olam business model. 133 page report is very telling indeed. we have a Co. that has been expending using recycled capital from fund raising. Need to check who the major financiers are and especially the equity side business is now damaged so its now standing on 1 leg - ie the business better generate cash enough to pay the bond holders and bank?

If that model is as what Muddy water points out to be flawed. We could well see a complete bail out from bankers and that's serious damage to commodities business.

We know the rice and sugar is kaput and not sure about nuts? I think Muddy got the right target hit in a very uncertain business environment.

trade 3 rounds of olam and only make a small bit but the rest all lost money. Looking at the sell vol. not sure who would win at the end of the day.

Muddy should perhaps do 1 on Genting also