* $750 mln of 6.75 pct five-year bonds being sold at 95 pct
* Bonds have warrants to buy total 387 mln shares at $1.291
* Deal being offered pro rata to shareholders
* Temasek fully backs offer, states support for Olam
* Temasek to take rights not subscribed by shareholders
(Adds detail, background)
By Anshuman Daga and Eveline Danubrata
SINGAPORE, Dec 3 Singaporean commodities trader
Olam International, under attack from short-seller
Muddy Waters, has raised $712.5 million through an issue of
bonds with warrants to buy shares, days after saying it had
The deal, to be offered pro rata to Olam shareholders, is
backed by Singapore state investor Temasek Holdings
which has a 16 percent stake and said on Monday it would buy
rights not taken up by other investors.
For nearly two weeks, Olam has been locked in a battle with
Muddy Waters, which in a 133-page report said aggressive
spending, accounting practices and debt levels had left the
company on the verge of collapse.
Olam has sued Muddy Waters in a Singapore court and issued a
detailed rebuttal of the allegations, saying it was not at risk
of insolvency and had enough liquidity.
Its bonds-with-warrants issue, intended to bolster Olam's
liquidity and its credibility in the markets, was seen by
analysts as a strategy that it could use to put the squeeze on
short-sellers such as Muddy Waters.
Some shareholders may be unhappy with the potential dilution
to their holdings, after Olam chief executive Sunny Verghese had
said it would not be issuing new bonds or equity. Temasek will
not be one of those complaining.
"While no business is without risks, we remain comfortable
with Olam's credit position and longer term prospects, and are
pleased to have another opportunity to invest in the company,
alongside other shareholders," David Heng, Temasek Senior
Managing Director, Investments, said in a statement.
Olam's shares have fallen 10 percent since the battle with
Muddy Waters began last month. They closed at S$1.575 on Friday
and were suspended from trade on Monday.
Its bonds have also fallen, with an issue due 2017
, the most liquid, slipping to 83.5/84.5
cents on the dollar for a yield of 10 percent, down from around
96/97 before the Muddy Waters allegations surfaced.
Olam borrowed heavily to fund its expansion beyond trading
into the actual production and processing of agricultural
commodities from cotton to coffee to cashew nuts. Bond markets
have grown jittery over debt which totalled S$8.4 billion ($6.9
billion) at the end of September.
A rights issue, analysts said, would both bolster its
liquidity and put pressure on short-sellers, since shareholders
who had lent them stock would now be calling those shares back
in so they could participate in the issue.
Olam is issuing a nominal $750 million of 6.75 percent
five-year bonds at a price of 95 percent, raising $712.5
The bonds have warrants attached that will allow holders to
buy a total 387 million shares at $1.291, which would raise $500
million if they were all exercised.
The bonds and warrants will be traded separately.
Credit Suisse, DBS Bank, HSBC, and J.P. Morgan were joint
bookrunners, lead managers and underwriters for the transaction.
($1 = 1.2205 Singapore dollars)
(Additional reporting by Umesh Desai in Hong Kong; Editing by
Edmund Klamann and Dan Lalor)