Olam shares up 3.1% to $1.66; Muddy Waters stands by founder's comments

Olam International shares rebounded Wednesday, after the commodities firm defended its accounting following questions raised by short-seller Carson Block.

Shares of one of the world’s leading agribusiness companies, which fell 7.5% Tuesday, were up 5% at $1.69 at 11:25 a.m. Its American Depositary Receipts rebounded 19% to US$26.00 Tuesday after falling more than 20% Monday.

Olam, which listed in Singapore in 2005, is among the 40 largest listed companies in Singapore in terms of market capitalisation. The company supplies 20 agricultural commodities, including cocoa, coffee, cotton and timber.

Block, founder of Muddy Waters, told an investment conference in London on Monday he was betting against Olam.

Olam fired back against. Block’s “negative comments” on Tuesday, with two statements to the Singapore stock exchange and a conference call with analysts and the media to defend its accounting methods and explain apparently high debt levels.

Later Tuesday, Muddy Waters Research also stood by its founder’s comments in a letter addressed to Olam Chief Executive Sunny Verghese and its board members.

“We also note Olam’s attempts to impugn our credibility. You and your investors should note that attempting to silence critics is not a plan of corrective action,” the letter stated.

“Our research into Olam has been exhaustive, and we plan to resolutely stand by it.”

Aditya Renjen, the general manager for investor relations at Olam said Wednesday there was nothing substantive in the Muddy Waters note.

“We are very clear that we will defend whatever allegations that are levelled against us,” he said.

Olam is awaiting a detailed report from Muddy Waters before it comments further, Renjen said.

Olam’s debt totalled 8.4 billion dollars in its fiscal first quarter ended Sept. 30, a 12% increase from the fourth quarter’s $7.5 billion and more than quadruple the $1.9 billion in 2007.

Ernst & Young Singapore, Olam’s auditor, confirmed late Tuesday that the Singapore company was a client but declined to comment further.