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UPDATE3: Olympus eyes boosting capital by 100 bil. yen.

TOKYO, Dec. 20 Kyodo


Olympus Corp. is considering boosting its capital by about 100 billion yen as its group net assets have decreased sharply after it corrected past earnings reports following a coverup of investment losses dating back to the 1990s, sources close to the matter said Tuesday.

The camera and medical equipment maker has requested several securities firms to mediate financing and is aiming to compile specific steps next month, the sources said.

In the funding, which is likely to mainly involve issuance of preferred shares, such companies as Fujifilm Holdings Corp., Sony Corp. and Terumo Corp. have shown interest in acquiring shares, the sources said.

Olympus said last week its capital adequacy ratio plunged to 4.5 percent as of the end of September from 11.0 percent at the end of March. The company apparently aims to restructure its business through selection and concentration of operations while maintaining trust.

Olympus hopes alliances with manufacturers or financial institutions through the envisioned share issuance will generate positive effects in its mainstay endoscope business, the sources said.

Hitachi Ltd. President Hiroaki Nakanishi, meanwhile, said in an interview with Kyodo News and other media that it is unlikely for the company to make investments in Olympus or buy its medical business, as it cannot expect synergy effects with Hitachi's medical business.

Olympus, which plans to obtain shareholder approval for the renewal of its management and a business revival plan at a special shareholders meeting next March or April, has judged it needs to compile detailed steps on the capital increase before the meeting.

But the issue of whether Olympus stock can remain listed on the Tokyo Stock Exchange may affect negotiations with potential share buyers, as the stock price could fluctuate sharply depending on the bourse's decision.

The TSE is currently examining whether to keep the stock listed and could possibly decide next month.

Olympus, which incurred huge losses on its securities investments after the burst of the asset-inflated bubble economy in the early 1990s, kept the losses off its books through various schemes, including transferring them to investment funds.

In its earnings for the April to September period which correctly reflected the concealed losses, it booked a group net loss of 32.33 billion yen, while its consolidated net assets dropped considerably to 45.95 billion yen as of the end of September.

Following the release of the latest financial statements, Olympus President Shuichi Takayama said at a news conference last week that the company would consider ''various measures'' to shore up its weakened capital base including capital and business alliances as well as marketing tie-ups.

Meanwhile, U.S. investment fund Southeastern Asset Management, which has a stake of about 5 percent in Olympus, said in a statement Monday it is opposed to a third-party allotment of new shares before an extraordinary shareholders meeting.

''No capital raising should be decided by the incumbent board,'' the investment fund said.

Any decision to issue new shares to a third party ahead of the shareholders meeting ''would likely be seen as a tactic to dilute the voting power of existing shareholders,'' it said.
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Publication:Japan Weekly Monitor
Date:Dec 27, 2011
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