Olympus Corp. is preparing to issue about $1.28-billion (¥100-billion) in new shares with Japanese high-tech stalwarts Sony Corp. and Fujifilm Holdings Corp. seen as likely buyers as it tries to bolster its depleted finances, the Nikkei business daily reported.
The report on the sale, which the Nikkei said could take the form of preferred shares, follows a warning from one of the camera and endoscope maker’s top foreign shareholders the scandal-tainted board may try to retain control by issuing new shares to dilute the power of existing shareholders.
Olympus shares jumped following the report, as worries about share dilution from capital raising were offset by the potential benefits for the company’s financial health.
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.
The company also reported a ¥32.33-billion net loss for the half-year to Sept. 30, although its diagnostic endoscope business, which holds a dominant 70-per-cent share of the global market, remains a strong cash earner.
The 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 Corp. may also acquire some of the stock, the report said, with details of the new share issuance due to be finalized by next month.
Olympus said it had made no decisions about capital raising and would consider all options as it proceeds with managerial reforms, while Sony and Fujifilm declined to comment.
Olympus stock traded up 13 per cent at ¥1,034 in volatile early trade after the report, reversing four straight days of declines.
“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.
Tennessee-based Southeastern Asset Management, which holds 5 per cent of Olympus stock, said on Monday it feared that moves to bring in a new Olympus investor would effectively sink a campaign to reinstate former CEO Michael Woodford, who blew the whistle on Olympus’ accounting scandal two months ago.
Mr. Woodford blasted Japanese shareholders last week during a trip to Japan for failing to stand up for him in his battle with the current board, which he argues should not play a role in selecting his replacement or setting out the company’s future after its complacency in the accounting fraud.
Southeastern said a move by Olympus to bring in a friendly shareholder would be seen as a last-ditch attempt by the existing directors to hold on to power and would further damage the image of corporate Japan.
The Olympus board has said it aims to hold an extraordinary shareholders meeting in March or April to install a new management team, but Mr. Woodford has called for swifter action.
Olympus is also under investigation by police, prosecutors and securities regulators who are expected to conduct raids this week on the company’s offices according to domestic media reports, and remains at risk of a delisting of its shares.
The case has so far focused, however, on actions by former chairman and president Tsuyoshi Kikukawa and two other former senior executives as the company used questionable acquisition deals and other accounting tricks to hide investment losses.