Olam International said allegations by Muddy Waters LLC are false and misleading and it will defend its reputation after the research firm likened it to Enron Corp. and said it runs a high risk of failure.
Muddy Waters rated Singapore-based Olam a strong sell in a 133-page report released on its website yesterday, saying it values Olam on a “liquidation basis, because our opinion is that it is likely to fail.”
“We believe that the report’s assertions are motivated to distract and create panic amongst our continuing shareholders, bond holders and creditors, to enable Carson Block and his associates to benefit from their short positions in Olam securities,” Olam said today in a statement. “We will continue to vigorously defend the reputation of the company.”
Olam, part owned by Singapore’s state-investment company Temasek Holdings Pte, has similarities with failed energy trader Enron Corp., Muddy Waters said yesterday in the report. The research firm says Olam uses non-cash accounting gains to boost its earnings, has been “burning cash” and will need to raise or refinance as much as $4.6 billion of debt over the next year to remain solvent.
“Olam faces no risk of insolvency,” the company said in the statement today. The company’s financial statements and accounting policies strictly follow and adhere to Singapore Financial Reporting Standards, Olam said.
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