Olam Raises $712.5 Million From Oversubscribed Bond Offering
By Michelle Yun & Klaus Wille - Jan 25, 2013 5:47 PM GMT+0800
Olam International Ltd. (OLAM), the commodity supplier targeted by short-seller Carson Block, raised $712.5 million from a 10 percent-oversubscribed bond sale, which was backed by its two largest shareholders.
Kewalram Singapore Ltd. and Temasek Holdings Pte took up all of their entitlement of bonds, which were were priced at 95 cents on the dollar, and warrants, the Singapore-based trading company said yesterday in a statement. Olam, which expects the bonds and warrants to start trading Jan. 31, said Chief Executive Officer Sunny Verghese also took up his share.
Olam, the world’s second-largest rice trader, said last month that it planned to sell $750 million in bonds and as much as $500 million in warrants to address any “lingering doubts” about its finances. Olam’s bonds and shares sank in November after Block, founder of Los Angeles-based Muddy Waters LLC, questioned its accounting and expansion strategy.
“Muddy Waters has caused greater scrutiny,” said Carey Wong, a senior analyst at OCBC Investment Research Pte. The bond sale results mean there are other people willing to put their money into Olam and the proceeds of the sale “really do come in handy. There’s no question about it,” he said.
Olam shares advanced 0.9 percent to close at S$1.63 in Singapore. That compares with a 0.6 percent gain in the benchmark Straits Times index.
‘Strong Support’
Temasek, which agreed to buy any rights not taken up by other investors, didn’t go beyond its entitlement, according to Jeffrey Fang, a spokesman for the Singaporean state investment company. The offer indicates “strong support from the bond and equity markets for Olam,” Verghese said in the statement.
Olam received applications for $827 million, or about 10 percent more than the $750 million under offer, it said.
The company, also one of the world’s top six cotton traders, fell 27 percent last year in Singapore trading and is down 6.3 percent since Block first said he was short on the stock and the company was likely to fail. Olam has dismissed the claims, saying it’s in the best financial health since its initial public offering in 2005.
A short seller profits by selling borrowed shares and buying them back at a lower price. Olam’s 5.75 percent bonds due September 2017 fell to a record low of 83.2 cents on Nov. 30, from 97 cents on Nov. 19, the day Block first said he was short the stock, Bloomberg prices show.
“We maintain our belief that Olam will fail because it has squandered huge amounts of money on investments that are incapable of repaying the debt incurred to finance them,” Block said yesterday in a statement. “This financing only postpones the inevitable, while putting more investors’ funds at risk.”
Temasek Holding
Temasek increased its stake in Olam to 20 percent from 16 percent last month in a series of transactions. Kewalram Singapore is the largest shareholder with 20.2 percent, according to data compiled by Bloomberg. It said last month it would also subscribe to the bonds.
Olam shareholders approved a sub-underwriting fee to be paid to a Temasek unit by the banks arranging the sale, the company said Jan. 15.
RRJ Capital, a fund run by former Goldman Sachs Group Inc. banker Richard Ong, planned to buy Olam bonds and shares, a person with knowledge of the matter said last week. The fund bought the rights to $90 million of Olam bonds on Jan. 15, their last trading day, the person said. It also plans to invest $60 million to exercise the warrants to be issued with the five- year, 6.75 percent bonds.
Fracking Services
RRJ’s team includes Ong’s brother, Charles Ong, who left his post as senior managing director of special projects at Temasek last January. RRJ teamed up with a group including Temasek in 2011 to purchase Frac Tech Holdings LLC, a Fort Worth-based hydraulic-fracturing services company.
The price of rights to participate in the bond issue, which traded for a week, fell about 41 percent to 7 U.S. cents on Jan. 15. They reached a high of 22.5 cents on the first trading day.
The decline in the price indicated a lack of interest from shareholders as Olam’s finances were still “far too opaque,” Michael Dee, a former senior managing director at Temasek, said in an article in Singapore’s Business Times newspaper Jan. 19.
In November, Muddy Waters offered to pay to get Olam’s debt rated, saying “investors should wonder whether the company is worried that a rating would mortally wound it.” Olam’s Verghese rejected the offer. Block reiterated his offer yesterday.
To contact the reporters on this story: Michelle Yun in Hong Kong at myun11@bloomberg.net; Klaus Wille in Singapore at kwille@bloomberg.net.
To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net.
- wong chee tat :)
Showing posts with label rice. Show all posts
Showing posts with label rice. Show all posts
Monday, July 1, 2013
Monday, December 24, 2012
Demand for rice in China falls with rising affluence
Demand for rice in China falls with rising affluence
By Valarie Tan | Posted: 23 December 2012 2234 hrs
JILIN: China may be the world's biggest rice consumer, but some say demand will fall, as its people become more affluent and consume more meat and dairy products.
Nearly 200 million tonnes are produced in China each year.
But as grain processing became more mechanized, the appetite of affluent Chinese has also became more polished.
On average, a person in China is said to consume 90 kilograms of rice each year.
While that number is also the highest in the world right now, it is also expected to decrease over time.
With growing affluence, the Chinese are reportedly supplementing their diet with more dairy products, such as milk and cheese.
Meat and other protein-rich products are almost considered staple food.
Changing dietary patterns have led experts to predict that rice consumption in China will fall by half in the next decade.
A similar trend is already seen in countries like Japan and South Korea.
Despite changing dietary habits, Singapore-based Wilmar International remains positive.
"Those who eat more protein and dairy products will also demand for better quality rice. They're after the consumer-pack premium rice, so it won't affect demand," said Wu Zhihua, rice division director of Wilmar International.
"In recent years, consumer-pack rice has reached a volume of 6 to 7 million tonnes and is growing at 4 to 50 per cent each year."
Wilmar International is already China's largest producer of consumer-pack oil, under the brand Golden Dragon Fish.
Wilmar International has set its sights on growing its market share of consumer-pack rice - which currently stands at five per cent - by investing in better crops.
Mr Wu said: "Our investment here will be bigger than the ones for normal padi. The farmer must be incentivized to grow better crop for every order. While it's a huge investment, the unique grade of harvested crop can be processed into better rice and in turn fetch a higher price in the market."
Demand will also be kept up by another trend, where rural residents switch from wheat to a rice diet.
It is enough to drive up this year's projected rice consumption to over 137 million tons.
- CNA/xq
- wong chee tat :)
By Valarie Tan | Posted: 23 December 2012 2234 hrs
JILIN: China may be the world's biggest rice consumer, but some say demand will fall, as its people become more affluent and consume more meat and dairy products.
Nearly 200 million tonnes are produced in China each year.
But as grain processing became more mechanized, the appetite of affluent Chinese has also became more polished.
On average, a person in China is said to consume 90 kilograms of rice each year.
While that number is also the highest in the world right now, it is also expected to decrease over time.
With growing affluence, the Chinese are reportedly supplementing their diet with more dairy products, such as milk and cheese.
Meat and other protein-rich products are almost considered staple food.
Changing dietary patterns have led experts to predict that rice consumption in China will fall by half in the next decade.
A similar trend is already seen in countries like Japan and South Korea.
Despite changing dietary habits, Singapore-based Wilmar International remains positive.
"Those who eat more protein and dairy products will also demand for better quality rice. They're after the consumer-pack premium rice, so it won't affect demand," said Wu Zhihua, rice division director of Wilmar International.
"In recent years, consumer-pack rice has reached a volume of 6 to 7 million tonnes and is growing at 4 to 50 per cent each year."
Wilmar International is already China's largest producer of consumer-pack oil, under the brand Golden Dragon Fish.
Wilmar International has set its sights on growing its market share of consumer-pack rice - which currently stands at five per cent - by investing in better crops.
Mr Wu said: "Our investment here will be bigger than the ones for normal padi. The farmer must be incentivized to grow better crop for every order. While it's a huge investment, the unique grade of harvested crop can be processed into better rice and in turn fetch a higher price in the market."
Demand will also be kept up by another trend, where rural residents switch from wheat to a rice diet.
It is enough to drive up this year's projected rice consumption to over 137 million tons.
- CNA/xq
- wong chee tat :)
Monday, July 25, 2011
Rice price hike possible due to new Thai policies
Rice price hike possible due to new Thai policies
By Ryan Huang | Posted: 20 July 2011 2237 hrs
SINGAPORE: Thailand is expected to roll out policies to help its rice farmers get higher prices by the end of the year.
And there are some concerns this might affect importing countries like Singapore.
Some industry players said this might drive prices up by around 50 per cent, but some analysts said there is no need to panic yet because the eventual impact from the plans may not be significant.
Thailand's rice farmers can expect to earn more when a new policy to guarantee them higher prices comes into force by year end.
Giving farmers a minimum price to sell their rice was one of the key policy changes for Thailand's incoming government. Prime Minister-elect Yingluck Shinawatra had pledged to buy unmilled rice or paddy from growers at 15,000 baht, about 50 per cent above current prices.
But this has raised concerns because it will mean rice exports from Thailand could cost more in the future.
Under the proposed policy, farmers can sell their rice to the government for at least 50 per cent above current prices.
And even before it has been rolled out, there has already been some impact on the market.
Andrew Tan, Chairman of Singapore General Rice Importers Association, said: "A lot of rice millers in Thailand are anticipating this price increase. So they are keeping their paddy, resulting in a (lesser) supply of rice in the market, and causing prices to increase.
"So far rice prices have been going up by about 5 to 10 per cent from the Thailand side. And Singapore importers are currently absorbing this cost; two reasons - because of the strong Singapore dollar, and second, we have been buying rice and stockpiling them in the warehouse before this announcement."
Thailand's rice-export benchmark was set last week at US$555 a tonne, according to the Thai Rice Exporters Association.
And some industry players have raised the alarm that prices could surge to about US$810 a tonne by the end of the year, according to the median estimate of six millers, exporters and traders in a survey by Dow Jones.
But some analysts said it is still early to be overly concerned.
Santitarn Sathirathai, an economist at Credit Suisse, said: "There are two important points to consider. First point is that the government has to buy a large share of produce each year in order to have a big influence on the price. Given that Thailand produces as much as 30 million tonnes per year, that's going to take a lot of money from the government in order to buy up a huge amount.
"By way of reference, back in 2008 when rice prices already peaked, the government already bought as much as 30 per cent of rice at 20 per cent above market price, and that didn't really prevent the price from falling.
"Second point, we are not sure if it's even in the government's interest to bump up the market price of rice too much. After all a lot of the poor people in Thailand are net buyers of rice, which means an increase in price rice would hurt them as well, and inflation in Thailand is already a problem.
"So what we might see is that the government may choose to act as an intermediary where they buy rice at a higher price and sell it to the wholesalers and the exporters' market at a lower price, therefore subsidising farmers and the consumers at the same time, and bearing the loss the fiscal balance on the state-owned bank's balance."
Singapore retailers like Sheng Siong Supermarket said they are monitoring the situation closely.
"It is too early to tell whether prices of Thai rice will be affected. We also source our rice supplies from Vietnam," said a spokesperson for Sheng Siong Supermarket.
There will be other factors that will have an impact on rice prices as well. This includes the strength of the Singapore dollar, and whether markets such as India and Vietnam match any price increases.
There will be a clearer picture when Thailand reveals more details of its policy, which is not expected to be rolled out at least until November.
Any potential price increases could be capped by a move by India on Monday to offer cheaper alternatives on the export market.
India approved its first rice export in three years, giving the green light to export of 1 million metric tons of non-basmati rice from private companies. This will be sold at a minimum price of $400 a tonne.
Analysts said the move could help ease the pressure on global prices in the short term, but longer term prices will still be shaped by details on Thailand's new policy.
"While it remains unclear how quickly the new government will implement the campaign promise, impact on the importing economies, Singapore in particular will be notable. Thailand is one of the main rice suppliers for the Republic and an increase there could percolate to local supplies here," said Radhika Rao, Regional Economist at Forecast.
"In our view, a few offsetting measures will cushion the full impact of higher external prices. Supermarkets could use existing stockpiles to temper sharp increases; local sourcing companies could seek alternative suppliers - Vietnam, Cambodia India, Bangladesh to name a few," she added.
- CNA /ls
- wong chee tat :)
By Ryan Huang | Posted: 20 July 2011 2237 hrs
SINGAPORE: Thailand is expected to roll out policies to help its rice farmers get higher prices by the end of the year.
And there are some concerns this might affect importing countries like Singapore.
Some industry players said this might drive prices up by around 50 per cent, but some analysts said there is no need to panic yet because the eventual impact from the plans may not be significant.
Thailand's rice farmers can expect to earn more when a new policy to guarantee them higher prices comes into force by year end.
Giving farmers a minimum price to sell their rice was one of the key policy changes for Thailand's incoming government. Prime Minister-elect Yingluck Shinawatra had pledged to buy unmilled rice or paddy from growers at 15,000 baht, about 50 per cent above current prices.
But this has raised concerns because it will mean rice exports from Thailand could cost more in the future.
Under the proposed policy, farmers can sell their rice to the government for at least 50 per cent above current prices.
And even before it has been rolled out, there has already been some impact on the market.
Andrew Tan, Chairman of Singapore General Rice Importers Association, said: "A lot of rice millers in Thailand are anticipating this price increase. So they are keeping their paddy, resulting in a (lesser) supply of rice in the market, and causing prices to increase.
"So far rice prices have been going up by about 5 to 10 per cent from the Thailand side. And Singapore importers are currently absorbing this cost; two reasons - because of the strong Singapore dollar, and second, we have been buying rice and stockpiling them in the warehouse before this announcement."
Thailand's rice-export benchmark was set last week at US$555 a tonne, according to the Thai Rice Exporters Association.
And some industry players have raised the alarm that prices could surge to about US$810 a tonne by the end of the year, according to the median estimate of six millers, exporters and traders in a survey by Dow Jones.
But some analysts said it is still early to be overly concerned.
Santitarn Sathirathai, an economist at Credit Suisse, said: "There are two important points to consider. First point is that the government has to buy a large share of produce each year in order to have a big influence on the price. Given that Thailand produces as much as 30 million tonnes per year, that's going to take a lot of money from the government in order to buy up a huge amount.
"By way of reference, back in 2008 when rice prices already peaked, the government already bought as much as 30 per cent of rice at 20 per cent above market price, and that didn't really prevent the price from falling.
"Second point, we are not sure if it's even in the government's interest to bump up the market price of rice too much. After all a lot of the poor people in Thailand are net buyers of rice, which means an increase in price rice would hurt them as well, and inflation in Thailand is already a problem.
"So what we might see is that the government may choose to act as an intermediary where they buy rice at a higher price and sell it to the wholesalers and the exporters' market at a lower price, therefore subsidising farmers and the consumers at the same time, and bearing the loss the fiscal balance on the state-owned bank's balance."
Singapore retailers like Sheng Siong Supermarket said they are monitoring the situation closely.
"It is too early to tell whether prices of Thai rice will be affected. We also source our rice supplies from Vietnam," said a spokesperson for Sheng Siong Supermarket.
There will be other factors that will have an impact on rice prices as well. This includes the strength of the Singapore dollar, and whether markets such as India and Vietnam match any price increases.
There will be a clearer picture when Thailand reveals more details of its policy, which is not expected to be rolled out at least until November.
Any potential price increases could be capped by a move by India on Monday to offer cheaper alternatives on the export market.
India approved its first rice export in three years, giving the green light to export of 1 million metric tons of non-basmati rice from private companies. This will be sold at a minimum price of $400 a tonne.
Analysts said the move could help ease the pressure on global prices in the short term, but longer term prices will still be shaped by details on Thailand's new policy.
"While it remains unclear how quickly the new government will implement the campaign promise, impact on the importing economies, Singapore in particular will be notable. Thailand is one of the main rice suppliers for the Republic and an increase there could percolate to local supplies here," said Radhika Rao, Regional Economist at Forecast.
"In our view, a few offsetting measures will cushion the full impact of higher external prices. Supermarkets could use existing stockpiles to temper sharp increases; local sourcing companies could seek alternative suppliers - Vietnam, Cambodia India, Bangladesh to name a few," she added.
- CNA /ls
- wong chee tat :)
Subscribe to:
Posts (Atom)