Olam / Muddy Waters - eat my shorts Singapore Inc to short sellers: Back off. Olam's bonds-and-rights salvo aims the full financial firepower of Temasek, the state investment agency and Olam's second-largest shareholder, against Muddy Waters, the commodity trader's vocal critic. The offering's complexity is headache-inducing and looks like the outcome of an investment bankers" off-site team-building exercise. OK team, you have one hour to come up with a deal that hurts shorts, sidesteps acknowledging their point about our capital position, and raises substantial cash without freaking out bond markets or upsetting shareholders. Go! What Olam has come up with is selling $750m of five-year bonds yielding 8 per cent, with $500m in warrants stapled to them. The warrants are exercisable after three years at last Friday's closing price; they can trade separately from the bonds after the transaction has been completed. Complexity aside, Olam's goals have been roughly met. The offering is fully underwritten by mighty Temasek, so there is little execution risk. Subscribers for the warrants will have to recall shares loaned to shorts, squeezing Olam's critics where it hurts. The cash raised via the bonds is expensive but removes any liquidity questions - a central Muddy point - for at least a year. The warrants are not exercisable for three years, delaying dilution. The offering's success matters beyond Olam's battered investors: it is the first time a target of this type of headline-seeking short has opened the capital-raising arsenal. For now, the plan seems to have worked. Olam's debt and equity have rallied. Muddy Waters says the move only postpones Olam's collapse. But Singapore is betting that it can shift the debate from Olam's accounting and solvency to who has the greater firepower: the city state, with an eye to deterring future attacks of this kind, or the shorts.