Photo: Bloomberg TV screenshot
Last week, Carson Block’s newest short, Singapore-based Olam was fine with the amount of cash it was holding (thank you very much).Now, as FT Alphaville spotted, the commodity trading firm seems to have changed its mind.
Muddy Waters founder and famed short-seller Block announced that he was taking a short position on the company last month. His 133 page note basically ground down to the point that it was only a matter of time before the company was done.
10 days later, the company’s CEO told Reuters that it had no plans to raise debt for another 5-6 months.
Today, though, the Olam announced a $750 million rights issue to meet capital requirements and term out short-term debt (h/t FT Alphaville).
The directors (the “Directors”) of Olam International Limited (the “Company”) wish to announce that the Company proposes to undertake a renounceable underwritten rights issue (the “Rights Issue”) of US$750 million in principal amount of 6.75 per cent bonds due 2018 (the “Bonds”), in the denomination of US$1.00 for each Bond, with 387,365,079 1 free detachable warrants (the “Warrants”), each Warrant carrying the right to subscribe for one new ordinary share in the capital of the Company (the “New Share”) at an exercise price of US$1.291 for each New Share (the “Exercise Price”), on the basis (the “Rights Issue Basis”) of 313 Bonds of principal amount of US$1.00 each with 162 Warrants for every 1,000 existing ordinary shares in the capital of the Company (the “Shares”) held by the Entitled Shareholders (as defined in paragraph 2.2 of this Announcement)… The issue price of the Bonds will be 95 per cent. of the principal amount and the gross proceeds from the issue of the Bonds is US$712.5 million.
Here’s the thing: Olam’s number one shareholder is Temasek, Singapore’s Sovereign Wealth Fund. Tamasek owns 16% of the company and has no desire to see it go under, of course. They’re underwriting the entire offer.
Trading on Olam has been halted for today, so we’ll find out how the market feels about this tomorrow.