HONG KONGâ€"Short-sellers have a number of tools at their disposal when seeking to profit from a drop in a target company's share price.
But Friday, Muddy Waters Research, the short-seller founded by Carson C. Block, introduced an unusual twist in its battle against the Singapore agricultural commodity company Olam International: an offer to pay for Olam to get its debt rated by Standard & Poor's.
‘‘We hereby make a bona fide offer to pay for Olam to have one of its public debt issues rated by S.&P.,'' Muddy Waters said in a statement published on its Web site and circulated via e-mail.
The latest volley from Muddy Waters, the short-seller based in the United States and Hong Kong, followed another week of testy exchanges between Muddy Waters and Olam.
The war of words started Nov. 19, when Mr. Block, in a speech in London, questioned Olam's accounting and the sustainability of its debt load. Olam responded by temporarily haltin g trading in its shares and filing a defamation lawsuit in Singapore High Court against Muddy Waters and Mr. Block.
Last Monday, the short-seller published a 135-page report that likened Olam to Enron, a U.S. company that went bankrupt in 2001, saying the Singapore company was ‘‘likely to fail'' and questioning the bookkeeping on its acquisition of a flour milling business in Nigeria, among other issues.
Two days later, Olam responded with a 45-page report of its own that dismissed the findings of Muddy Waters as ‘‘false and misleading.'' Olam said it faced no risk of insolvency and elaborated at length on the valuation and performance of its many trading and operating businesses around the world. It said the short-seller was attempting to ‘‘distract and create panic'' among its shareholders and bondholders, something it called ‘‘a strategy of shouting fire in a crowded room.''
In its statement Friday, Muddy Waters said Olam's allegations were defamatory. ‘‘The shares we have shorted are a fraction of the number of shares short,'' the statement said. ‘‘We are not working in concert with a group of hedge funds to try to drive the stock price down.''
Muddy Waters added that its offer to pay for the debt rating would expire next Wednesday.
Representatives for Olam did not immediately respond Friday to requests for comment.
