Singapore-based commodity trader Olam International Ltd (SGX:O32) said that it has dropped the lawsuit against Carson Block and his firm Muddy Waters Llc.
The world’s second largest rice trader said the decision was made after many of the company’s shareholders suggested that Olam International Ltd (SGX:O32) should focus on delivering value rather than fighting critics, according to a Singapore Stock Exchange filing.
In response to Olam International Ltd (SGX:O32)’s decision, Muddy Waters chief Carson Block said that his company always expected a positive outcome from the lawsuit, even through a verdict, according to Bloomberg.
The war of words between Olam International Ltd (SGX:O32) chief executive officer Sunny Verghese and Block began after Block said during a conference call in London that Olam is on the verge of collapse. He also questioned the Singaporean commodity trader’s accounting practices and compared the company with Enron.
Sunny Verghese responded by saying that Block’s statements were fabricated to panic Olam shareholders so that the shortseller could profit from the company. Olam International Ltd (SGX:O32) shares had tanked 20 percent within a month as the war of words continued to grow.
Block has a history of criticizing Asian companies and betting against those stocks. Earlier, he published a similar critical report on the Chinese forestry firm Sino-Forest that was listed in Toronto. The stock began to plunge dramatically, and Sino-Forest finally filed for bankruptcy, creating huge losses for investors including John Paulson.
According to Verghese,Block secretly came to visit Olam International Ltd (SGX:O32)’s office with the representatives of a hedge fund. Block visited the company under a fake name, and nobody at Olam recognized him at that time. Olam International Ltd. had reconized Mr. Block a few days later when the company executives saw his photos on Muddy Waters website.
David Gerald, the Securities Investors Association of Singapore, advised Olam International Ltd (SGX:O32) not to pursue a company or person who has no assets in Singapore. Even if the rice trader wins, that would just be a paper judgement.
Since Muddy Waters Llc first questioned Olam International Ltd., the Singaporean company has raised $712.5 million in bonds and exited investments in a sugar mill. Temasek Holdings Pte is the largest shareholder of Olam International Ltd (SGX:O32).
Olam International Ltd (SGX:O32) shares were down 0.60 percent to S$1.65 at the close of Singapore trading session.
