Commodities trader Olam International, which fended off an attack by United States-based short-seller Muddy Waters in 2012, is discovering it is good to have friends with deep pockets.
Nineteen banks from around the globe last week lent US$1 billion (S$1.4 billion) to the company, which has been controlled by Temasek Holdings since last year.
Olam's 2020 dollar bonds returned 6.9 per cent in the past year, as those of rival commodities traders slumped.
Noble Group's notes of the same maturity lost 24 per cent in the same period and Trafigura Beheer BV's euro-denominated bonds have lost 10.6 per cent since their April sale.
Olam, flush with cash from loans as well as its share of a more than US$1 billion investment by Mitsubishi Corp, plans to take advantage of a commodities rout that it has called a US$2 billion opportunity for acquisitions. Pacific Investment Management Company said last month the worst of the collapse is probably past, after a 26 per cent tumble in raw materials' prices in the 12 months through September.
"After the Temasek stake acquisition, credit spreads have narrowed and they have found it easier to borrow," said analyst Abhijit Attavar at Jefferies Group. "There was a point when management was preserving cash, but now they can again go into acquisitions."
Olam plans to pursue deals of between US$100 million and US$200 million, a shift from its previous strategy of smaller acquisitions around the US$10 million mark, chief executive officer Sunny Verghese said in September.
The food trader's latest deal is even bigger: a US$1.2 billion purchase of Archer Daniels-Midland Co's cocoa business last month.
Noble has also been a Muddy Waters target, as the short-seller this year joined Iceberg Research in questioning the firm's accounting methods. While that helped Noble's stock to sink 56 per cent this year, the company's fortunes are improving after it obtained fresh funds from lenders. Its shares soared 28 per cent in the last month.
Muddy Waters declined to comment on its trading position in Olam, according to Mr Zach Kouwe, an outside spokesman for the short seller. Muddy Waters had said Olam was "likely to fail" in 2012 and called the shares worthless in a September report the following year. Temasek declined to comment.
"The increase in Temasek's stake in Olam and the acquisition of a 20 per cent shareholding by Mitsubishi at a premium have further strengthened our credit profile," said Mr Jayant Parande, the company's group treasurer.
BLOOMBERG
