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  "documentTitle": "Olam International Ltd. (SGX:O32)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson Block",
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  "presentationDate": "2012-11-27 00:00:00",
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  "notes": "The slide serves as a critical investigation into Olam's due diligence and post-acquisition management of SK Foods.",
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      "text": "One might wonder whether Olam sought this reappraisal to support the negative goodwill.",
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      "text": "There appear to be legacy issues that Olam hasn't fully resolved, including probable product safety and sanitation issues. We also question whether Olam has been able to salvage key customer relationships. These are exactly the kinds of issues one would want to understand through due diligence, for which many other potential bidders apparently felt there was not enough time.",
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      "text": "Since the acquisition, it appears that Olam has been earning a negative return on the investment. Now, some three years into the business plan, the Company has finally disclosed that the operation is under-performing, required a large inventory liquidation and write down as well as operational \"resizing.\" As of 4Q12, Olam Tomato Processors was ignominiously listed along with the Company's chronic disclosed underachievers Open Country Dairy Limited (OCDL) and Pure Circle as operating \"below par\". (As is clear from our report, those three companies are only the tip of the iceberg of Olam's poorly performing investments.)",
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      "text": "This upwards revision of the PP&E asset value at the Williams plant was followed by a more recent effort to undo the upward assessment through an appeal filed by Olam. The appeal claimed that its Williams plant should only be assessed by the local tax authority at one-tenth of its current value or US$7.1 million (from its current US$70.4 million valuation), a US$63.3 (S$77.3 million) downward revaluation.",
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      "text": "In the course of investigating the valuation discrepancy, we uncovered an incidence of a major upwards tax assessment asset value revaluation of the Williams plant one year post-acquisition, which covers much of the S$73.1 (US$50.3) million difference. One might wonder whether Olam sought this reappraisal to support the negative goodwill.",
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      "text": "The book value of SK Foods PP&E as being only S$116.8 (US$80.3) million at the time of the acquisition, a difference of S$73.1 million (US$50.3 million).",
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      "text": "SK Foods was a tomato processor with two processing facilities in Lemoore and Williams, California. It was a large supplier of processed tomatoes to US packaged goods companies, such as Kraft, Frito-Lay, and other major brands. According to the Company, SK was the second largest tomato processor in the US and in the top five in the world. However, in 2008 SK foods shocked the nation as a major scandal unfolded. As a result of a joint investigation by the FBI, IRS-Criminal Investigation, FDA Office of",
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      "kind": "quote",
      "text": "\"SK Foods Former and CEO Scott Salyer Pleads Guilty to Racketeering and Price Fixing in California,\" — US Department of Justice, March 23, 2012",
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      "text": "84-87 Footnotes detailing financial data sources and legal context.",
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      "text": "Background – a \"Racketeering Organization\"",
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