Japan’s scandal-hit Olympus Corp is likely to miss a Monday deadline for reporting its first-half earnings, sources with knowledge of the matter said, a failure that would bring the 92-year-old firm a step closer to delisting.
Tokyo police are investigating the company’s concealment of substantial investment losses going back two decades for possible violation of financial laws, the Yomiuri Shimbun newspaper said yesterday. It said police had asked Olympus for internal accounting documents and would question Olympus executives.
The scandal has raised doubts about the future of the once-venerable maker of cameras and endoscopes and experts said the firm’s only future might lie in being taken over. However, potential buyers would likely steer clear until the dust settles.
“Delisting does not mean it can’t survive, or that it would definitely be forced to declare bankruptcy,” said Hiroyuki Fukunaga, CEO of Investrust. “It has lost a lot of capital, but its businesses still have high value.”
“Potential investors can’t consider buying out the businesses until all of the investigations are complete,” Fukunaga said.
Olympus would almost certainly miss a deadline for reporting its results on Monday because its external auditor, Ernst & Young ShinNihon, will not have the information needed to sign off on them, sources with knowledge of the matter said.
A failure to meet the deadline would likely prompt the Tokyo Stock Exchange to put Olympus on a supervision list, giving it another month — to Dec. 14 — to report its earnings. If it failed to meet that deadline it could be delisted.
Olympus stunned investors on Tuesday by revealing it had used M&A deals to hide securities investment losses that the Nikkei Shimbun newspaper said may have exceeded US$1 billion. The firm has commissioned an independent panel to investigate. The result of that review is not expected until next month.
The auditor would want to wait for the review’s completion and the expected restatement of past earnings before signing off on its latest results, the sources said.
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