Accused firm seeking "aggravated and exemplary damages".
In an update to its announced legal action filed before the High Court of Singapore, Olam International Limited (Olam) said it has initiated legal action against both Muddy Waters and director of research Carson Block, including aggravated and exemplary damages, for libel, slander and malicious falsehood, for their negative assertions on the agribusiness firm's accounting standards.
Olam said the accusations -- which ranged from Olam’s ‘unsustainable’ business model, ‘highly leveraged’ financial position and ‘aggressive’ accounting practices, specifically in areas of accounting for biological gains/assets and recognition of negative goodwill -- have caused its shares to come under pressure.
Olam said it "strongly rejects these baseless and unsubstantiated assertions made by Muddy Waters and Carson Block" and reiterated its integrity.
"The Company is in a sound financial position and has built a strong, unique and well differentiated competitive position in its industry and has a reputation and track record for transparency and good governance. Olam reaffirms that its financial statements and accounting policies strictly follow and adhere to the Singapore Financial Reporting Standards (“SFRS”)," said Olam.
"The Company has continually updated its stakeholders on the long-term growth strategy that was first articulated in 2009 of building a well-balanced and diversified business (with a bias towards food raw materials which are relatively more recession resistant). We believe that our strategy of selective integration will continue to allow us to develop a uniquely shaped portfolio with a clear sustainable competitive advantage," it added.
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