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June 1 (Bloomberg) --
Temasek Holdings Pte, Singapore’s
state-owned investment company, agreed to buy a stake in Olam
International Ltd., its first foray into commodities since
naming
Charles “Chip” Goodyear as chief executive officer-
designate in February.
Breedens Investments Pte and Aranda Investments Pte, two
Temasek subsidiaries, will pay S$437.5 million ($303 million)
for 273.5 million new shares, or
13.76 percent, in Olam at
S$1.60 apiece, the Singapore-based agricultural commodities
supplier said in a statement. The price is 18 percent lower than
the May 29 closing price of S$1.94.
Look like current action by Temasek is window dressing for Year end.
Their investment in Olam is still in red after 3 years
Hi I would like to know what will happen to my existing share after 28/12/12 if I don't take up any so call rights? Thks.
ok thanks Richardus. so can i say this known fact for now won't affect the current investment strategy to take on?
Richardus ( Date: 19-Dec-2012 18:52) Posted:
According to Bloomberg article, Temasek held a 4.9 percent stake in Olam between 2002 and 2006. It invested in the company on a further three occasions, raising its stake to its current level in June last year. For the current situation (as per your question), the fact that Temasek had a stake even before listing, is of no significance.
The question however was raised when, Future made a comment about Temasek selling for a profit and then re-investing in Olam again. Still waiting for his reply on what's the source of this comment.
teohty ( Date: 19-Dec-2012 18:06) Posted:
pardon me if i sound stupid, but is Temasek being Olam's shareholder even before Olam was listed on SGX a good thing or a bad thing for the current situation? And why? |
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The offer price for OLAM IPO was at $0.62, and temasek sold its holdings off at $1.57. Thats 60% return aka handsome profit.
76 million x 0.60 = 45.6 million.
Richardus ( Date: 19-Dec-2012 18:52) Posted:
According to Bloomberg article, Temasek held a 4.9 percent stake in Olam between 2002 and 2006. It invested in the company on a further three occasions, raising its stake to its current level in June last year. For the current situation (as per your question), the fact that Temasek had a stake even before listing, is of no significance.
The question however was raised when, Future made a comment about Temasek selling for a profit and then re-investing in Olam again. Still waiting for his reply on what's the source of this comment.
teohty ( Date: 19-Dec-2012 18:06) Posted:
pardon me if i sound stupid, but is Temasek being Olam's shareholder even before Olam was listed on SGX a good thing or a bad thing for the current situation? And why? |
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3 kingdom has no Accounting (but some Romance) which is key in this battle.
It is long way to go....small investors would be handicapped by late info and limited understanding of the intricate details
pasttime ( Date: 19-Dec-2012 14:02) Posted:
wa. more exciting then 3 kingdoms.
then it was borrow arrow with straw boat.
now is burning his chain boat.
will king kong let him go or chop chop.
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These were sold in Mar 2006 at $1.57 per share according to SGX filing.
Obfuscate ( Date: 19-Dec-2012 18:48) Posted:
Temasek had 75.5m shares representing 5.04 pct of the enlarged share capital at IPO. Info from the IPO prospectus.
Future ( Date: 19-Dec-2012 15:53) Posted:
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According to
Bloomberg article,
Temasek held a 4.9 percent stake in Olam between 2002 and 2006. It invested in the company on a further three occasions, raising its stake to its current level in June last year. For the current situation (as per your question), the fact that Temasek had a stake even before listing, is of no significance.The question however was raised when,
Future made a comment about Temasek selling for a profit and then re-investing in Olam again. Still waiting for his reply on what's the
source of this comment.
teohty ( Date: 19-Dec-2012 18:06) Posted:
pardon me if i sound stupid, but is Temasek being Olam's shareholder even before Olam was listed on SGX a good thing or a bad thing for the current situation? And why? |
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Temasek had 75.5m shares representing 5.04 pct of the enlarged share capital at IPO. Info from the IPO prospectus.
Future ( Date: 19-Dec-2012 15:53) Posted:
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pardon me if i sound stupid, but is Temasek being Olam's shareholder even before Olam was listed on SGX a good thing or a bad thing for the current situation? And why?
Please share the data...
Do you mean that the " handsome profit" is bigger than what Temasek holding on right now??
Temasek 200,000 shares purchase today does look like a jab to boost morale or make news....
Future ( Date: 19-Dec-2012 15:40) Posted:
Did u know Temasek was OLAM's shareholder even before OLAM was listed on SGX. Temasek sold OLAM for handsome profit and re-invested.
Check it out man.
alooloo ( Date: 19-Dec-2012 15:30) Posted:
Info found on internet
2009 June Temasek invest $437.5M to get 237.5M shares (cost around $1.84 per share)
2011 June Temasek subscribe new share $245M to get 94.4M shares (cost around $2.6 per share)
The latest move doesn't help much on averaging down...
More like trying to boost confident for OLAM.
window dressing before year end?
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Thanks,
Future!
Read all of it just now but can not find any mention of selling before re-investing again. Can you point me in right direction to find this info? Cheers mate!
Future ( Date: 19-Dec-2012 15:53) Posted:
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I found that article on the web, where e same source was quote saying there will be big buying in the afternoon which apprently already occured. Not sure if the information is supposed to be private. So take it with a pinch of salt and exercise your own judgement.
It could be just rumours, but the content supported my own analysis on OLAM, that's why i posted.
Octavia ( Date: 19-Dec-2012 15:45) Posted:
Future, can you furnish the extract article orgin? The bank name was not mentioned and quite surprise they would ask such questions. The source looks dubiuos. |
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Hi mate, Temasek first invested in Olam in 2003, before its listing on the Singapore exchange. It invested in the company on a further three occasions, raising its stake to its current level in June last year.
http://www.ft.com/intl/cms/s/0/673b3324-3d49-11e2-9e13-00144feabdc0.html#axzz2FJq8k6x9
http://www.intellasia.net/temasek-backs-olam-rights-issue-252272Richardus ( Date: 19-Dec-2012 15:49) Posted:
Dear future,
May I humbly ask where I can learn more about Temasek owning Olam before the listing, selling and then re-investing again please? Thank you in advance!
Future ( Date: 19-Dec-2012 15:40) Posted:
Did u know Temasek was OLAM's shareholder even before OLAM was listed on SGX. Temasek sold OLAM for handsome profit and re-invested.
Check it out man |
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Dear future,
May I humbly ask where I can learn more about Temasek owning Olam before the listing, selling and then re-investing again please? Thank you in advance!
Future ( Date: 19-Dec-2012 15:40) Posted:
Did u know Temasek was OLAM's shareholder even before OLAM was listed on SGX. Temasek sold OLAM for handsome profit and re-invested.
Check it out man.
alooloo ( Date: 19-Dec-2012 15:30) Posted:
Info found on internet
2009 June Temasek invest $437.5M to get 237.5M shares (cost around $1.84 per share)
2011 June Temasek subscribe new share $245M to get 94.4M shares (cost around $2.6 per share)
The latest move doesn't help much on averaging down...
More like trying to boost confident for OLAM.
window dressing before year end?
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Future, can you furnish the extract article orgin? The bank name was not mentioned and quite surprise they would ask such questions. The source looks dubiuos.
Did u know Temasek was OLAM's shareholder even before OLAM was listed on SGX. Temasek sold OLAM for handsome profit and re-invested.
Check it out man.
alooloo ( Date: 19-Dec-2012 15:30) Posted:
Info found on internet
2009 June Temasek invest $437.5M to get 237.5M shares (cost around $1.84 per share)
2011 June Temasek subscribe new share $245M to get 94.4M shares (cost around $2.6 per share)
The latest move doesn't help much on averaging down...
More like trying to boost confident for OLAM.
window dressing before year end?
|
|
Info found on internet
2009 June Temasek invest $437.5M to get 237.5M shares (cost around $1.84 per share)
2011 June Temasek subscribe new share $245M to get 94.4M shares (cost around $2.6 per share)
The latest move doesn't help much on averaging down...
More like trying to boost confident for OLAM.
window dressing before year end?
Good job Future. Thanks for posting. Whaever happened to the joker predicting the low $1.21 range.
Future ( Date: 19-Dec-2012 13:43) Posted:
Came across this report from a swiss bank on olam bond sales. Please do not use this as a buy or sell decision.
Report:
Our team met the management of OLAM yesterday. Among other things, the following issues were discussed and wish to share with you, hopefully to address some of the concerns you may have on its recent headlines:
1. Why did OLAM announce a bond cum right issue, instead of re-considering/cutting capex for next year
a. The bond issues was a short term tactical measure designed to rebuild confidence and to end all speculations that OLAM could be running out of funds or liquidity. Even thought this was not the case, the management acknowledged that these things can take its own dynamic and a loss confidence can be very damaging
b. Board saw an immediate necessity to “bridge the confidence gap”
c. Temasek has effectively written a ‘put’ on OLAM’s debt
d. The capex program is under review will be discussed between now and February and changes be done. This is not something which could have been decided over the weekend- nor would such a knee jerk reaction have been either credible or a service to its shareholders and stakeholders. OLAM realizes that as a growing and FCF (free cash flow)-negative company it is vulnerable to these kind of attacks and intends to reduce its vulnerability
2. Why this complicated exercise to raise cash?
a. With these 750 mio, OLAM will have no more funding needs well into 2014
b. The main shareholders (Family, Temasek, Verghese) didn’t want to be diluted – OLAM had committed at the last rights issue to shareholders that no new shares would be issued for 4 years. With the new warrant structure, the new shares will only be exercised in 2016 (keeping that commitment)
c. Still: the board recognizes the need to treat all shareholders equally (as Temasek had signed its willingness to take up the whole issue), hence the rights that give all shareholders the ability but not the obligation to be on the same footing as Temasek.
d. The cost of the new bond (IRR 8%) is to put the deal on a commercial basis for Temasek. Temasek is NOT giving free money to OLAM. Temasek will also be taking an additional cut in the underwriting fee for the issue.
e. The new bonds are coming out at a yield of ~8%, around the current levels for Olam papers. In the short run this does provide a new reference rate for Olam papers)
3. Leverage
a. OLAM is having the lowest leverage ratio since listing at the moment
b. Short term financing is fully collateralized and consists of trade finance for merchandise which is to 80-90% already contracted
c. OLAM has a 90 days average inventory turn. Per month the company delivers ca. 1.2 Bn SGD of goods, which then settles the lines with banks. In the last few weeks as the crisis has unfolded, lines have been repaid and redrawn with no changes to conditions
d. No bank has pulled any line or renegotiated the conditions
4. Rating
a. Rating has never been necessary, as OLAM as so far addressed pools of funds of investors which know the company well.
b. Other companies in the same are not rated either (most prominent: Louis Dreyfus)
c. Singaporean companies issuing bonds seldom get a rating as they are well known within its potential investors
5. Acquisitions
a. Sometimes good will is build, but sometimes assets get revalued, namely when company successfully turn around businesses it buys.
b. MW pictures in the report are misleading and do not depict OLAM assets or operations
c. Out of 40 acquisitions, 2 didn’t deliver the expected result and where shut down/written down. This has been clearly documented
6. Dealing with MW
a. OLAM has being dealing with main stakeholders on a daily basis since the “crisis” started
b. Main shareholder incl. Temasek and Family have fully supported the company and the rights issue
c. OLAM will desist from reacting to each and every comment from MW, as the intent is clearly to create panic and the 133 report content very little facts
d. OLAM is suing MW for slander/libel in Singapore High court. It has evidence that MW has been selling the report to hedge funds already in May. At the same time short positions started to increase. This raises the potential for ‘insider’ trading and market manipulation – given the current investigation into hedge fund activity in NY this is likely to run as well.
e. MW also deliberately misled public by announcing a 80 pages report and then delivering 1 days later a 133 pages one (manipulation)
All in all, this was a heavy crisis for OLAM according to CEO Sunny Verghese. The company realizes that as a public company, having a growing profile, complex accounting in different countries and a negative free cash flow, you make yourself vulnerable for short seller like MW. The company will work hard to reduce piece by piece this vulnerability. It will eventually also become FCF (free cash flow) positive earlier than planned (2016) and thus start creating shareholder value. The company has always been and is profitable, running an operating cash flow of 500 Mio SGD per year.
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1. No doubt Olam now is less leveraged than when it IPO in 2005 but Mr Dee in his letter to Business Times on 6 Dec, and using net gearing as a measure, said it is still more than twice as leveraged as Noble Group and almost three times as leveraged as Wilmar. It is true that Louis Dreyfus' credit is not rated but this firm has just one bond issue of US$350 million and Dreyfus is one of the big four players globally. It is the D in the ABCD of global commodities trading. Olam's outstanding bonds total S$3.5 billion currently equivalent according to public records.
2. I don?t know how funding needs are calculated but in its filing with SGX, Olam had, as of 30 Sep 2012, $3.8 billion of debts due within a year and another $4.6 billion due after one year. So I find it rather interesting that there is NO MORE funding needs well into 2014. http://olamonline.com/wp-content/uploads/2012/11/14Nov2012-Q1FY2013_ResultsANN.pdf
