One of Olympus Corp’s top shareholders, Nippon Life Insurance, cut its stake in the scandal-hit Japanese firm, but yesterday signaled it would remain as an investor in the company, citing its strong core business and technology.
Olympus, which makes cameras and medical equipment, is being investigated by police, prosecutors and regulators after admitting this month to hiding investment losses for decades and using payments linked to acquisitions to aid the cover-up.
Nippon Life, which cut its holding from 8.18 percent to 5.11 percent, said it had done so because of uncertainties surrounding the company, but would still back the firm.
Photo: Reuters
“Our basic stance is that we will continue to support Olympus due to the company’s high technological strength in its core business and because it is in the public’s interest,” Nippon Life official Akira Tsuzuki said.
Olympus may sell assets to help pay down US$3.4 billion in debt under a plan aimed at keeping the support of its banks, the Nikkei Shimbun said. Their backing is vital because the firm is relatively highly geared and is expected to have to make some hefty writedowns after its accounts are put straight.
The once-proud company put forward the debt-reduction proposal at a meeting with creditors on Wednesday, offering to cut its debt by about ¥260 billion (US$3.4 billion) over the next three years, the Nikkei said.
The paper quoted a senior banker as saying Olympus did not face any imminent cash crunch.
The dubious M&A payments included a huge US$687 million fee paid to obscure financial advisers for Olympus’ US$2.2 billion purchase of British medical equipment firm Gyrus in 2008. The fee was the world’s biggest, according to Thomson Reuters data.
Shares in Olympus, which have lost 70 percent of their value since the scandal broke last month, see-sawed in heavy trade yesterday, surging by as much as 18 percent then giving up almost all of those gains to end 0.95 percent up at ¥747.
Investors are betting that the firm will escape a delisting, although executives deemed responsible for the scandal may well face criminal charges.
SMBC Friend Securities strategist Fumiyuki Nakanishi said banks were major shareholders as well as lenders to Olympus and none of them would benefit from a delisting, which would effectively cut the firm off from equity capital markets.
The Tokyo Stock Exchange has put Olympus on a watchlist as a possible prelude to delisting. If the firm does not meet the Dec. 14 deadline, it would be automatically delisted.
The bourse can still delist its shares depending on the scope of the misstatements. However, a securities watchdog source has said it might recommend that the company be fined, a move that could decrease the risk of delisting.
At Wednesday’s meeting, which involved about 100 bankers, two major creditors, Sumitomo Mitsui Banking Corp and Bank of Tokyo-Mitsubishi UFJ (BTMU), said they would continue to support the firm, multiple sources said.
Sumitomo Mitsui Banking Corp is the core banking unit of Sumitomo Mitsui Financial Group, and BTMU is the main unit of Mitsubishi UFJ Financial Group.
Olympus’ interest-bearing debts stood at about ¥650 billion on a consolidated basis as of end-March. SMFG and BTMU have total loans of more than ¥400 billion to the firm, which also borrowed about ¥100 billion in syndicated loans, according to banking sources.
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