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Olam and Muddy Waters

Taipan49

By Taipan49,
in Lite & EZ

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Celicar

Celicar

Turbocharged

Two, he is trying to make this a 'Godfather' deal, hoping that he can trigger a massive short covering, forcing the shortists to lose money.

 

He is trying to fire a bazooka to scare them off.

It also buys him another 1 year of cash. Very smart.

 

Hopefully it works.

If it doesn't, i would like to see if he has any other options or another bazooka/silver bullet.

The bonds, SGD 5.8% 2019 was around 90+ at 9 am, but dropped to around 88+ by lunch time.

And shares only closed 1.5% up.

 

This is my personal opinion. Could be wrong, so please dont take my word for it

Lao hong ah, up so little by closing.

 

Anyway, I'm as lay as a lay person can be, but take new money to plug old holes, sounds a bit ponzi to me.

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Duckduck

Duckduck

Turbocharged
(edited)

The CEO is doing a few things.

First, he is playing his trump card . By playing up Temasek, he is saying, Temasek is backing me up.

 

since that is his "show hand" river card , his company is highly vulnerable IMO frm future attacks. Anymore crap after this no more bailouts = finished.

Id stay away from this end game coy liao. plenty of other fish to catch w way better fundamentals.

 

Flop turn river i know all your cards liao end of game, texas holdem style.

Edited by Duckduck
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Zanter

Zanter

3rd Gear

So Muddy Waters released 133 page report yesterday on Olam and likened it to Enron. They say that Olam makes acquisitions for purpose of boosting profits with non-cash accounting gains. Bonds of the company are approaching "distressed" levels.

 

Company has net debt of $6.4bn and that has doubled in the past 4 years. In August they said they were targeting annual profit of $1bn by 2016, and net income this year through to June fell to 370.9m. So the debt not going away anytime quickly.

 

And Temasek owns 16% of this. Worrying.

 

The worrying part is that Temasek is gonna to underwrite the bonds which the other shareholders do not subscribe in the bonds rights issue. The highly leveraged Olam can only survive in a low interest enviroment where they borrow at low cost due to Temasek links and earn a pitiful return on their investment. So borrow from the capital market at 6.5% & get return of 8%, hopefully more.

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Dumb

Dumb

4th Gear

Thanks. Hopefully , they will show us what they going to do with the $$ in the nxt few days. Else I will have to say bye bye to my shares.

 

Seiously why are they issuing bond at this point in time. It's worse than doing nothing.

 

What can they do with the proceeds from the rights issue? There is equally high debts maturing next year.

 

The company also have huge current bank loans. If bankers start to tighten credit or not willing to roll over the loans, then big trouble.

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Dumb

Dumb

4th Gear

The worrying part is that Temasek is gonna to underwrite the bonds which the other shareholders do not subscribe in the bonds rights issue. The highly leveraged Olam can only survive in a low interest enviroment where they borrow at low cost due to Temasek links and earn a pitiful return on their investment. So borrow from the capital market at 6.5% & get return of 8%, hopefully more.

 

TH going into business of underwriting? Later may be also undertaker.

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Duckduck

Duckduck

Turbocharged
(edited)

muddy was right that olam needs money to stay afloat or else belly up liao?

 

aka PONZI scheme lol

Edited by Duckduck
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Taipan49

Taipan49

3rd Gear
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What can they do with the proceeds from the rights issue? There is equally high debts maturing next year.

 

The company also have huge current bank loans. If bankers start to tighten credit or not willing to roll over the loans, then big trouble.

 

The rights issue is aimed at paying that back. All it is doing is moving the short-term debt out to medium-term debt, or delaying the inevitable if they don't start generating free cashflow.

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Ben5266

Ben5266

Supercharged

Not saying who is right or wrong, but some sayings:

 

No smoke without fire.

 

No wave without wind.

You test our IQ?

 

Ok.. No smoke without fire.... tear gas. Or dry ice add water?

 

No wave withou wind.... hmmmm Tsunami?

 

[cool]

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Celicar

Celicar

Turbocharged

You test our IQ?

 

Ok.. No smoke without fire.... tear gas. Or dry ice add water?

 

No wave withou wind.... hmmmm Tsunami?

 

[cool]

无风不起浪 you hear b4?

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Cars08

Cars08

1st Gear

I got a friend already lose 40% of this capital buying this fellow...i told him...a...be prepared to lose more hor...it's getting dirty... ^_^

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ShepherdPie

ShepherdPie

5th Gear
(edited)

I got a friend already lose 40% of this capital buying this fellow...i told him...a...be prepared to lose more hor...it's getting dirty... ^_^

 

Lesson learnt.. never invest in something that TH is heavily vested. ...

Seriously, Olam is a blue chip , commodities looks good under a high inflation environment..

As long as I am not looking at a short-term return..I thought i can sleep well.

 

Then come MW ... now all hell break loose. I hate to sell my stock when it's neg.. given that I dun really need the $$ back.

 

Any expert here? that can give 2cent worth? shld i hold till next yr ?

Edited by ShepherdPie
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