Olam International Ltd, the Singapore commodities trader that fended off an attack from US-based short seller Muddy Waters LLC in 2012, is discovering it's good to have friends with deep pockets.
Nineteen banks from around the globe last week lent US$1 billion ($1.4 billion) to the company, which has been controlled by Singapore state investment fund Temasek Holdings Pte since 2014. Olam's 2020 dollar bonds returned 6.7% in the past year, as those of rival commodities traders slumped. Noble Group Ltd.'s notes of the same maturity lost 25% and Trafigura Beheer BV's euro-denominated bonds lost 10.8%.
Olam, flush with cash from loans as well as a recent US$1 billion investment by Mitsubishi Corp, plans to take advantage of a commodities rout that it's called a US$2 billion opportunity for acquisitions.
Pacific Investment Management Co said last month the worst of the collapse is probably past, after a 26% tumble in raw-materials prices in the 12 months through September.
"After the Temasek stake acquisition, credit spreads have narrowed and they have found it easier to borrow," said Abhijit Attavar, a Singapore-based analyst at Jefferies Group LLC.
"There was a point when management was preserving cash, but now they can again go into acquisitions."
Olam plans to pursue deals of between US$100 million and US$200 million, a shift from its previous strategy of smaller acquisitions around the US$10 million mark, Chief Executive Officer Sunny Verghese said in September. The food trader's latest deal is even bigger: a US$1.2 billion purchase of Archer Daniels-Midland Co's cocoa business in October.
Singapore-listed peer Noble Group has also been a Muddy Waters target, as the short-seller this year joined Iceberg Research in questioning the firm's accounting methods. While that helped Noble Group's stock sink 58% in 2015, the company's fortunes are also turning after getting fresh funds from lenders. Its shares soared 22% in the last month.
Muddy Waters declined to comment on its trading position in Olam, according to Zach Kouwe, an outside spokesman for the short seller. Muddy Waters said Olam was "likely to fail" in 2012 and called the shares worthless in a September report the following year. Temasek declined to comment.
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Nineteen banks from around the globe last week lent US$1 billion ($1.4 billion) to the company, which has been controlled by Singapore state investment fund Temasek Holdings Pte since 2014. Olam's 2020 dollar bonds returned 6.7% in the past year, as those of rival commodities traders slumped. Noble Group Ltd.'s notes of the same maturity lost 25% and Trafigura Beheer BV's euro-denominated bonds lost 10.8%.
Olam, flush with cash from loans as well as a recent US$1 billion investment by Mitsubishi Corp, plans to take advantage of a commodities rout that it's called a US$2 billion opportunity for acquisitions.
Pacific Investment Management Co said last month the worst of the collapse is probably past, after a 26% tumble in raw-materials prices in the 12 months through September.
"After the Temasek stake acquisition, credit spreads have narrowed and they have found it easier to borrow," said Abhijit Attavar, a Singapore-based analyst at Jefferies Group LLC.
"There was a point when management was preserving cash, but now they can again go into acquisitions."
Olam plans to pursue deals of between US$100 million and US$200 million, a shift from its previous strategy of smaller acquisitions around the US$10 million mark, Chief Executive Officer Sunny Verghese said in September. The food trader's latest deal is even bigger: a US$1.2 billion purchase of Archer Daniels-Midland Co's cocoa business in October.
Singapore-listed peer Noble Group has also been a Muddy Waters target, as the short-seller this year joined Iceberg Research in questioning the firm's accounting methods. While that helped Noble Group's stock sink 58% in 2015, the company's fortunes are also turning after getting fresh funds from lenders. Its shares soared 22% in the last month.
Muddy Waters declined to comment on its trading position in Olam, according to Zach Kouwe, an outside spokesman for the short seller. Muddy Waters said Olam was "likely to fail" in 2012 and called the shares worthless in a September report the following year. Temasek declined to comment.
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