Olam Intl   

OLAM_OLAM

Shortists better cover your positions quick ... strong buying up at 1.54

bbshares      ( Date: 19-Dec-2012 14:18) Posted: looks like Muddy Waters against Singapore Government ...   who will win ? actually not important, the important things is did we make money Richardus      ( Date: 19-Dec-2012 14:12) Posted: Nice report! Thanks for sharing!

 

looks like Muddy Waters against Singapore Government ...   who will win ? actually not important, the important things is did we make money

Richardus      ( Date: 19-Dec-2012 14:12) Posted: Nice report! Thanks for sharing!  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.

 

Nice report! Thanks for sharing! 

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.

 

shortists kena squeeze tight, tight.

cannot talk and breathe now.

 

Bonds and warrants are structured in a way that will benefits long term investors tremendously - its still a good catch for short term holding though as the funds will accumulate OLAM for its long term prospect.

The exercise price of warrant approx 1.58 is only applicable after 2 years. so it will not depend on how the price play out in the short term. In fact it would be more favourable if the current share price go over the exercise price even before the X-right date, as it would price the warrant even more favourably.

All in all, i do agree this is a great deal for LONG TERM investors - what OLAM need and price its RIGHTS for in the first place.

I have interest in OLAM vested.

alexmay      ( Date: 19-Dec-2012 13:58) Posted: my guess 1.55, my reach 1.57 by 27Dec, otherwise, why take up the bonds? Comments?

 

  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.

 

maybe they aim for $1.6?

dicksonh      ( Date: 19-Dec-2012 13:56) Posted: wonder what will closing price be today

 

my guess 1.55, my reach 1.57 by 27Dec, otherwise, why take up the bonds? Comments?

 

very fierce

 

wonder what will closing price be today

 

 

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.

 

Your prediction may come true sooner than you think,.......very strong buy up at 1.515 Shortists better act fast

Peter_Pan      ( Date: 19-Dec-2012 13:16) Posted: Like pump and dump. eurekaw      ( Date: 19-Dec-2012 13:14) Posted: better punch thru $1.52 with volume..if not down again

 

In an emailed comment to Channel NewsAsia, a Temasek spokesperson said: " We have invested in Olam over several years. In our judgement, the company represents a reasonably attractive investment over the long term and we are pleased to have the opportunity to add to our stake."

Full story HERE 

 

Like pump and dump.

eurekaw      ( Date: 19-Dec-2012 13:14) Posted: better punch thru $1.52 with volume..if not down again tonylim      ( Date: 19-Dec-2012 12:47) Posted: Shortists in deep trouble no

 

better punch thru $1.52 with volume..if not down again

tonylim      ( Date: 19-Dec-2012 12:47) Posted: Shortists in deep trouble now stevenlim109      ( Date: 19-Dec-2012 12:27) Posted: you have link to TSH?

 

Shortists in deep trouble now

stevenlim109      ( Date: 19-Dec-2012 12:27) Posted: you have link to TSH? risktaker      ( Date: 19-Dec-2012 12:23) Posted: any shorters still havnt cover......... last call......:)

 

you have link to TSH?

risktaker      ( Date: 19-Dec-2012 12:23) Posted: any shorters still havnt cover......... last call......:)

 

any shorters still havnt cover......... last call......:)

 

Here is the article on Bloomberg,

   

Bloomberg News

Temasek Buys 200,000 Shares in Olam After Backing Bond Sale

Future      ( Date: 19-Dec-2012 08:58) Posted: Yesterday temasek acquired 200,000 shares through Aranda Investments Pte. Ltd. DISCLOSURE OF INTEREST/CHANGES IN INTEREST OF SUBSTANTIAL SHAREHOLDER(S)/UNITHOLDER(S) Dec 19 2012 08:11:45 AM

 

Ya, sitting on huge profits hor..

wangerism      ( Date: 19-Dec-2012 11:56) Posted: Ah Gong supporting this stock...dun worry! lol