SINGAPORE Feb 8 Muddy Waters LLC kept its "strong sell" rating on Olam International Ltd, saying the Singapore commodities firm's borrowings had increased in its second quarter.
The short-seller also said that with Olam's bonds yielding around 7 percent to 8 percent, which it feels is too low, the company's interest burden is "not sustainable".
Olam said on Thursday it has begun a review of its business priorities and free cash flow targets as it announced a 20 percent rise in second-quarter net profit.
"One of the bright spots for Olam investors is that the company appears to be trying to rein in its capex and acquisition spending," Muddy Waters said in a statement on Friday.
Olam shares rose 0.6 percent to S$1.645, about 5 percent below the level before Muddy Waters attacked the company's aggressive spending and high debt in November.
The shares had partly rebounded after Olam got full backing from powerful Singapore state investor Temasek Holdings Pte Ltd , its second-biggest shareholder, for a bonds-with-warrants issue.
The review and the termination of a proposed $240 million investment in a sugar miller in Brazil are the first signs that Olam is breaking away from its debt-funded series of acquisitions over the past few years.