Muddy Waters takes deeper aim at Olam with letter

HONG KONG Tue Nov 20, 2012 9:32pm EST

HONG KONG Nov 21 (Reuters) - Muddy Waters, the research firm engaged in a battle against Singapore commodities trader Olam, published its first official material on the company on Wednesday, taking aim at Olam's use of cash and its debt load.

The tussle began on Monday, when Muddy Waters founder Carson Block was speaking at a conference in London. Block singled out Olam, saying his firm was unable to reconcile the company's capital expenditures with its announced projects.

Muddy Waters, a known short sheller that benefits when shares of a company it bets against fall, has issued devastating reports in the last few years, mainly aimed at China-based companies. Some of the reports crushed shares of the targets, although others were able to recover.

Olam responded on Tuesday with a strong defence of its business, and its stock closed down 7.5 percent after a steeper drop earlier.

Muddy Waters published a letter on its website on Wednesday, saying it believes that Olam will collapse. The letter, addressed to Olam's CEO and its board, took aim at the company's debt load and its cash burn rate. (Reporting by Michael Flaherty; Editing by Edmund Klamann)