Shares in farm commodities supplier Olam tumbled for a second day Thursday on lingering doubts about its financial health despite a $1.25 billion rights issue backed by Singapore's Temasek Holdings.
Olam stocks closed 4.3 percent lower at Sg$1.45 after falling as much as 5.9 percent at one point on the Singapore Exchange. They fell 5.3 percent on Wednesday.
Thursday's closing price represents a nearly 17 percent slump since November 19 when influential US-based short-seller Carson Block first raised questions about Olam's financial health at an investment conference in London.
Block's research firm Muddy Waters followed up with a 133-page report questioning the firm's accounting practices, debt levels, aggressive acquisitions and business model.
The scathing report predicted that Olam had a high risk of solvency and likened it to US energy giant Enron, whose dramatic collapse in 2001 was triggered by US government probes into its accounting practices.
Olam shot back with a defamation suit, a 45-page rebuttal and an announcement during a hastily arranged news conference late Monday on the rights issue, which it said had the support of powerful state investment firm Temasek, its second-biggest shareholder.
Olam shares surged the following day, but soon petered out as Muddy Waters said the move validated its claims that Olam was in debt.
Analysts also questioned the rights issue, noting that Olam just days earlier had said there was no need to raise funds.
"They tried to stamp out fears about their counter by doing that very interesting rights issue of bonds. That created a temporary blip," SIAS Research CEO Roger Tan said, according to Dow Jones Newswires.
"Investors have relooked at the issue and what management said they would use it for," he said, adding that investors "are giving strength to the validity of the Muddy Waters report".