Tuesday, October 7, 2008

Daily news - 6 Oct

Olam may consider more takeovers
Olam International Ltd – The commodities supplier whose shares have fallen to a two-year low, is able to meet its financial obligations and may consider further takeovers, CEO Sunny Verghese said. Mr Verghese said the company has ensured that it is well-positioned and that demand for its commodities wouldn't be hurt by slower economic growth triggered by the credit crisis. He added that Olam has no financing risk. Analysts have said that Olam's debt levels may be too high as commodity prices fall. But Mr Verghese said “companies with a good business model like ours will always be able to find money to support growth”. He also said that there may be 'one or two' more takeovers before the end of the year. Olam shares have slumped 39% so far this year, outpacing the 32% decline in the benchmark Straits Times Index. They dropped 7.56% to S$1.59 on Friday. The company has total debt of $3bn, according to Bloomberg data. Fund-raising this year included a US$300m convertible bond issue in June, and the sale of preferential shares worth S$307m in April.

SGX board stemmed investment loss: CEO
Singapore Exchange (SGX) – A $150m SGX investment in hedge funds could have been wiped out by today's financial crisis if not for the board's intervention, SGX chief executive Hsieh Fu Hua said at the company's annual general meeting Friday. He raised the issue after some shareholders questioned a proposed 40% hike in directors' fees, which was eventually passed. The investors asked whether it was appropriate to raise the fees now, when the capital markets are expected to fare badly because of the credit crisis. In August 2004, SGX pumped $150m into a market-neutral funds portfolio, which returned $131m in redemption proceeds this fiscal year 2008 - 12.7% less than the principal. Such funds are aimed at helping to 'neutralise' the effect of market movements by matching long and short equity positions in different stocks. SGX management wanted to continue investing in such funds at the end of a three-year investment mandate in mid-2007, but the idea was shot down by board members, who said the company should liquidate the fund instead. The sound advice from the board was proof that SGX needed strong directors in turbulent times, rather than cut back on directors' fees to save costs, Mr Hsieh told shareholders.

Source: Kim Eng

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