SINGAPORE Feb 7 (Reuters) - Singapore commodities firm Olam International Ltd, which came under attack last November by short-seller Muddy Waters LLC, has begun a review of its business including its priorities, capital spending and free cash flow generation targets.
"The review is expected to be completed within the next three months after which a suitable announcement will be made," Olam said in a statement after reporting its quarterly results.
Olam, also under scrutiny over an acquisition spree, said it had terminated a proposed $240 million investment in Usina Acucareira Passos, an integrated sugar miller in Brazil.
Analysts have projected higher financing costs for Olam and were watching for any signs that it is reining in its capital spending plans and acquisitions.
Muddy Waters in November rated Olam shares a "strong sell" and criticised its accounting practices, high debt levels and investment projects, sending the company's bond and stock prices tumbling and spurring it to announce a bonds-with-warrants issue the following month to shore up its finances.
Olam, backed by Singapore state investor Temasek Holdings Pte Ltd, raised $712.5 million from the rights issue last month. If the warrants are converted to shares after three years, it could raise an additional $500 million.
Olam said its net profit rose 20 percent to S$154.1 million ($124 million) for the three months to Dec. 31, from S$128.5 million a year earlier. The results included an operational gain of S$22.1 million due to fair valuation of biological assets.
While some analysts refrained from giving second-quarter profit forecasts for the company due to the uncertainty stirred by Muddy Waters' allegations, two analysts gave estimates ranging from $105 million to $117 million.
Concerns remain over Olam's debt and its growth prospects, and several brokers have cut their ratings and earnings forecasts on the company.
Temasek has built up its stake in Olam to 20 percent from around 16 percent before Muddy Waters targeted the company.
Olam's shares and bonds plunged in the wake of the short-seller's report, which included questions about the viability of overseas projects. (Reporting by Eveline Danubrata and Anshuman Daga; Editing by Edmund Klamann)