Singapore-based commodities trader Olam International announced on Monday an underwritten rights issue of 750 million U.S. dollars in principal amount of 6. 75 percent bonds due in 2018, together with 387.4 million free detachable warrants.

According to its announcement to Singapore Exchange, the company said each warrant carries the right to subscribe for one new share in the company. "Upon conversion of the warrants, the company will raise up to an incremental 500 million U.S. dollars of proceeds," the company added.

Olam said the issue price of the bond will be 95 percent of the principal amount, which means that its gross proceeds from the issue of the bonds will be about 712.5 million U.S. dollars.

Temasek, the 16 percent stake holder of the company, also "has undertaken to take up their rights entitlement and have also committed to subscribe for all bonds and warrants that are not subscribed for under the transaction", the company said in a statement, underlining the support by the sovereign wealth fund.

The troubled company was recently in dispute with U.S.-based short-seller Muddy Waters Research, which described Olam as a company that could collapse like U.S. energy trader Enron, with aggressive spending and accounting practices.

Olam also added in the announcement that "the transaction will allow the company to extend its debt maturity and liquidity profile, strengthen equity base and enhance capital structure and is not likely to have any impact on its net gearing levels."

Olam closed at 1.575 Singapore dollars (1.29 U.S. dollars) on Friday. It requested a trading halt in its shares for one day pending for the release of the announcement on Monday. Enditem

Go to Forum >>0 Comment(s)