Temasek lifts Olam stake by 200,000 shares

PHOTO: Temasek lifts Olam stake by 200,000 shares

Temasek Holdings has raised its stake in commodity trader Olam International from 16.99 per cent to 17 per cent, the firm said yesterday.

The news of the purchase sent Olam shares up 4.4 per cent or 6.5 cents to close at $1.54 yesterday.

Temasek remains Olam's second largest shareholder after the purchase.

"We have invested in Olam over several years. In our judgment, the company represents a reasonably attractive investment over the long term, and we are pleased to have the opportunity to add to our stake," a Temasek spokesman said yesterday via e-mail.

Temasek bought 200,000 shares for $293,000 on the open market on Tuesday through its vehicle Aranda Investments, Olam told the Singapore Exchange on wednesday.

Olam's largest shareholder is Kewalram Singapore, which owns 20 per cent and is part of Indian conglomerate Kewalram Chanrai Group that founded Olam in 1989.

Both Temasek and Kewalram have supported Olam's proposed rights issue of bonds and warrants which could raise as much as US$1.25 billion (S$1.5 billion) for the firm.

The rights issue consists of up to US$750 million in bonds, accompanied by warrants that will raise up to US$500 million upon conversion.

If shareholders want to buy shares that come with rights, their last day to do so is Thursday next week, according to a timeline Olam released on Monday.

Any shares acquired on or after Dec 28 do not come with the right to subscribe to the bonds and warrants.

Temasek will sub-underwrite the rights issue and has agreed to subscribe to all the bonds and warrants it is entitled to.

This translates to an outlay of at least US$127.5 million for Temasek as it increased its stake in Olam before the Dec 28 cut-off date.

Temasek could also end up owning as much as 29 per cent of Olam if it exercises all its warrants in 2016 at the earliest, said Olam CEO Sunny Verghese, according to a Bloomberg report.

The bonds and warrants will likely be issued in late January or early February.

An extraordinary general meeting for shareholders to approve the payment of a sub-underwriting fee to Temasek will also be held early next year.

Olam's share price has slumped 11.5 per cent since Nov19, when the founder of short-seller Muddy Waters, Mr Carson Block, told a hedge fund conference in London that day that he was shorting the firm as he doubted its financial health.