Shares in Bunge slumped 7% after the agribusiness giant revealed a $700m cash call, reviving speculation that it had its eye on acquisitions.

The New York-based group, the world's biggest oilseed processor by capacity, said it was issuing 10m new shares to raise money "to repay outstanding indebtedness and for other general corporate purposes".

It pointed out in particular $125m of outstanding commercial paper, and $299m due on outstanding borrowings.

Bid talk 

Nonetheless, the issue revived concerns that Bunge might be poised for further approaches, after a failed $4.4bn bid last year for Corn Products international.

Deutsche Bank estimated that Bunge could currently buy Corn Products for about $39 per share, or $3.7bn.

"However, given the still tight funding environment and amount of distressed assets in the agribusiness space globally, the ultimate use of funds is unknown, at this point," Deutsche Bank analyst Christina McGlone added.

Bunge shares stood $3.94 lower at $66.99 in afternoon trade in New York, after touching $65.85 earlier.

Corn Product International stock stood up $0.88 at $30.09, its highest since early January.

Cash flow question

Bunge, which is also the biggest producer and supplier of fertilizer in South America, estimated that the share issue would raise $696.6m after subtracting underwriting expenses.

Analysts had estimated that the group would end the year with net debt of $3.4bn, nearly three times its earnings before interest, tax, depreciation and amortisation, signalling a relatively high degree of borrowings.

Fitch, the ratings agency, last month restated its ratings on Bunge debt at BBB, two notches above junk, but warned that rising soybean prices could present a threat by squeezing processing margins.

"If soybean prices stay at a level close to $12 or increase, the company is likely to generate negative free cash flow in 2009," Fitch said.

August soybeans stood at $12.10 a bushel in late trade in Chicago on Tuesday.