Singapore's Olam to cut spending, debt after investor pressure
SINGAPORE, April 25
SINGAPORE, April 25 (Reuters) - Olam International Ltd , propped up by Singapore state investor Temasek Holdings after worries mounted over its high debt, said it will halve its capital spending in 2014 to 2016, cut its stake in an urea plant in Gabon and reduce its debt levels.
The Singapore-based agricultural commodities company, which came under attack from short-seller Muddy Waters last November and was forced to raise cash as its stock and bond prices tumbled, has been under pressure from investors to rein in its expansion plans.
"It will reduce capex by more than S$1 billion ($804 million) to between S$1.2 billion and S$1.6 billion from the earlier capex plan of S$2.2 billion to S$2.6 billion over the same period," the company said in a statement after releasing its strategy review on Thursday.
Olam plans to become free cash flow positive by the year ending June 2014. It will also seek to cut its stake in its Gabon fertiliser business, its biggest investment.
Olam's fortunes are increasingly tied to Temasek, which became Olam's top shareholder with a 24 percent stake, up from 16 percent, after subscribing to a $712.5 million cash call in January.