Olympus prepares to issue $1.3bn in shares

OLYMPUS IS preparing to issue $1.28 billion (€980m) in new shares to bolster its depleted finances, with Japanese high-tech stalwarts Sony and Fujifilm seen as possible buyers, the Nikkei business daily reported.

The report comes after a warning from one of the camera and endoscope maker’s leading shareholders that the scandal-tainted board may try to retain control by issuing new shares to dilute the power of existing shareholders.

Olympus shares surged by their daily limit yesterday after falling for four straight sessions on worries about how capital–raising may dilute existing shareholdings, with investors seeming to shift their focus to the firm’s finances.

“Some people are obviously seeing that this will add to its net assets and contribute to the financial health of the company and increase the value of the company,” said Masayoshi Okamoto, head of dealing at Jujiya Securities.

Olympus last week announced restated accounts for the past five years as it struggles to sort out a $1.7 billion accounting scandal dating back to the 1990s, whittling its net assets down to just 45.9 billion yen. It also reported a 32.33 billion yen net loss for April-September, although its diagnostic endoscope business, which holds a dominant 70 per cent share of the global market, remains a strong cash earner.

Nikkei said Olympus was believed to be considering issuing preferred shares that would not carry voting rights, although they would eventually be convertible into common stock.

Panasonic may also acquire some of the stock, the Nikkei report said, with details of the new share issuance due to be finalised by next month.

Olympus said it had made no decisions about capital-raising and would consider all options as it proceeds with managerial reforms.

Sony and Fujifilm declined to comment.

Tennessee-based Southeastern Asset Management, which holds 5 per cent of Olympus stock, said on Monday it feared moves to bring in a new investor would sink a campaign to reinstate former chief executive Michael Woodford, who blew the whistle on Olympus’s accounting scandal after he was fired two months ago. – (Reuters)