Can they happy happy just throw in money like that? Saving a private company with SWF.
Olam International, under attack from United States-based short seller Muddy Waters over its finances, has found strong backing from key shareholder Temasek Holdings, which will not only subscribe to its portion of a massive US$1.25 billion (S$1.52 billion) capital raising exercise by the Singapore-based commodities giant but will also subscribe to any bond or warrant not taken up by other shareholders.
Put together at the weekend by Olam's bankers and Temasek, the offer to the commodity firm's shareholders will see the issue of US$750 million in five-year bonds carrying a coupon of 6.75 per cent a year, stapled with up to US$500 million of warrants.
Each warrant can be converted to an Olam share at US$1.291 - the US equivalent of its share price on Nov 30 - after three years.
Olam Chief Executive Sunny Verghese told about 150 analysts and reporters at a briefing yesterday that Muddy Waters' action had put pressure on the company's shares and bonds, and the latest move sought to "eliminate lingering doubts from all the m&d that was thrown at us".
"The clear action on the part of Temasek to sub-underwrite an issuance of securities by the company is a resounding message of the support and confidence a discerning and sophisticated investor places in our company, our strategy and the integrity of our management team," he said.
Mr Verghese also noted that the transaction - further underwritten by four of its bankers, DBS, Credit Suisse, HSBC and JP Morgan - demonstrated "the company's ability to continue to access debt and equity capital even in current market conditions".
While Olam does not need the money to meet its present capital expenditure till 2016, it could be used to buy back some of its higher-priced bonds, he said.
Mr David Heng, Senior Vice-President (Investments) at Temasek, Olam's second-largest shareholder with a 16.3-per-cent stake, said: "While no business is without risks, we remain comfortable with Olam's credit position and longer-term prospects, and are pleased to have another opportunity to invest in the company, alongside other shareholders."
