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  "documentTitle": "Olam International Ltd. (SGX:O32)",
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  "authorName": "Carson Block",
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  "presentationDate": "2012-11-27 00:00:00",
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  "notes": "The slide uses a skeptical tone to expose potential financial engineering and poor investment decisions by Olam.",
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      "text": "This acquisition is puzzling, and might only make sense from a financial engineering perspective where Olam buys positions at various prices from low to high, then books a) revaluation gains for throwing good money after bad.",
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      "text": "In Olam's call with analysts regarding the partnership on January 30, 2012, Olam stressed that it is going to leverage the expertise Olam gained from NZFSU (we all know how well that worked out). In classic Olam style, its press release announced a purchase price of \"up to\" US$75 million. However, there is a lot of room to reach the US$75 million mark. The actual cash out flow is only S$8.5 million, and appears to be loss-making. Typical of Olam, Rusmolco is heavily indebted S$90 million.",
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      "text": "Now that Olam has bought NZFSU, investors will have to hope that past performance will be not be a guarantor for future results.",
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      "text": "Olam announced a partnership with Rusmolco on January 30, 2012. The partnership created Milky Projects Limited, with Olam owning 75% of the shares.",
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      "text": "Olam's M&A team would have, or at least should have, known that NZFSU has been losing money since before they targeted the company, is illiquid in the market, and was founded on incorrect assumptions that will require enormous capital to fix. This acquisition is puzzling, and might only make sense from a financial engineering perspective where Olam buys positions at various prices from low to high, then books a) revaluation gains for throwing good money after bad – particularly given that market perceptions that Olam will support or acquire the company might have helped push the stock price up, and b) biological gains on cattle.",
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      "text": "Unfortunately for investors, Rusmolco bears more than a passing resemblance to NZFSU. Rusmolco appears to be loss-making. Never fear, Management has assured the market that the cash will be funded, not by Olam, but through Rusmolco's internal accruals and Russian government subsidies. It appears that some of the incentives are really just US$109.9 million of debt from state-owned lender Russian Agricultural Bank. Apparently US$53.4 million of the loan will be to replenish working capital. Working capital replenishment is the largest single use of the loan.",
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      "text": "prices were expected to continue to trend downward. On the financial side, NZFSU expects that it will require an additional US$160 million to complete development of its existing farms, fund working capital and repay loans until operating cash flows reach break even. Olam's Q1 2013 results reiterated that milk production levels are still 10% behind the forecast.",
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      "text": "121-126 Footnotes referencing annual reports and news articles.",
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      "text": "Rusmolco – Likely Making NZFSU Seem Like a Good Idea (Which is Not Easy)",
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