Farm commodities trader Olam's chief executive on Friday bought one million shares in the firm to boost shareholder confidence amid a withering attack from influential US short-seller Muddy Waters.
Olam said in a filing to the Singapore Exchange that CEO Sunny Verghese bought the shares in the open market at Sg$1.54 each, raising his stake in the company to 4.67 percent from 4.63 percent.
Analysts said Verghese's move was aimed at shoring up confidence following a two-week slide in the shares triggered by Muddy Waters' allegations that Olam was in danger of a financial collapse similar to what happened to US energy trader Enron in 2001.
Olam rose 0.96 percent Friday to close at Sg$1.575.
The stock however is still down 9.5 percent from November 19 when Muddy Waters founder Carson Block first made the allegations at an investment conference in London, citing among others allegedly flawed accounting practices that masked its debts.
Muddy Waters also released a scathing 133-page report supporting its allegations and warned that Olam had a "high risk" of failing like Enron, whose spectacular collapse was triggered by US government probes into its accounting practices.
Olam fired back with a 45-page rebuttal which stressed that the company is on a sound financial footing, and then sued Muddy Waters for defamation at the Singapore High Court.
In a conference call with analysts and the media late Wednesday, Verghese said Muddy Waters was being used as a front for some hedge funds to drive down Olam shares in the hope of profiting from it later.
Short-sellers borrow shares and sell them in the hope their price will drop. They can then buy the shares back at a cheaper price and profit from the difference.
The dispute escalated Friday after Muddy Waters denied being a front for hedge funds and threatened to counter-sue Olam and Verghese for his remarks.
It asked Verghese to apologise, warning that Muddy Waters reserved the right to take legal action.
"Muddy Waters has always been transparent about our economic incentives," the US firm said Friday.
"We do, however, draw the line at being called 'manipulators' and being accused of acting in concert with a group of hedge funds to drive down the price of Olam shares".
Describing Verghese's remarks as defamatory, Muddy Waters said "we demand a full retraction and apology" and warned that "we reserve the right to pursue legal action against him and Olam for these baseless statements".
Muddy Waters also offered to pay for Olam to get its bonds rated by credit watchdog Standard and Poor's.
There was no immediate comment from Olam, which sources products including cocoa, coffee, cashew, sesame and rice from 65 countries and supplies them to more than 11,600 customers.
"This is clearly turning into a real slanging match between the two to save their reputations but comes across as a silly schoolyard disagreement," said Justin Harper, an analyst with IG Markets Singapore.
Muddy Waters' assessments of companies have been closely monitored, especially after a report in 2011 forced Chinese timber supplier Sino-Forest Corp to file for bankruptcy protection.
Singapore's state investment firm Temasek Holdings is Olam's second biggest shareholder, owning a 16 percent stake as of March 31.