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Muddy Waters Offers to Pay S&P for Second Opinion on Olam

Muddy Waters LLC, the short-seller sued by Olam International Ltd. (OLAM) for defamation, offered to pay to get the commodity trader’s debt rated as it sticks to its contention the company is in danger of failing.

Investors will benefit from the rating of Olam’s public debt by Standard & Poor’s, Muddy Waters said in a statement today. Olam boosted its capital expenditure plans since Muddy Waters criticized the Singapore-based trader Nov. 19 and this increased its risk of failure, the research firm said.

“Olam now has no good reason to avoid having its debt rated,” Muddy Waters said. “Should it continue to refuse a rating, investors should wonder whether the company is worried that a rating would mortally wound it by making clear that the market has been underpricing its risk.”

Chief Executive Officer Sunny Verghese bought 1 million Olam shares today, lifting his holding to 4.67 percent, according to a regulatory filing. Verghese bought the shares at S$1.54 apiece.

Olam, whose debt isn’t rated by any agency, has the equivalent of $5.8 billion of debtoutstanding, of which $2.89 billion is in bonds, according to data compiled by Bloomberg. The yield on its S$500 million of 6 percent bonds due October 2022 rose 21 basis points to 9.37 percent, according to prices compiled by Bloomberg, gaining for a fourth straight day.

The commodity trader’s shares gained 1 percent to S$1.575 at the close in Singapore. The stock has declined 9.5 percent since Block first questioned the company’s finances and accounting practices at a London conference.”

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