JAPAN/FILE: Olympus Corp risks foreign backlash as it nominates new president and chairman as part of board reshuffle
Record ID:
466090
JAPAN/FILE: Olympus Corp risks foreign backlash as it nominates new president and chairman as part of board reshuffle
- Title: JAPAN/FILE: Olympus Corp risks foreign backlash as it nominates new president and chairman as part of board reshuffle
- Date: 28th February 2012
- Summary: TOKYO, JAPAN (FEBRUARY 27, 2012) (REUTERS) OLYMPUS BOARD MEMBERS WALKING INTO NEWS CONFERENCE MAN TAKING PICTURES ON CAMERA (SOUNDBITE) (Japanese) NEWLY NOMINATED PRESIDENT HIROYUKI SASA SAYING: "The mission I have been given is to restore the damaged brand and people's trust. In order to do so, it is important not to let this sort of problem happen again, it is necessary to reform the business from the ground up and to look over our essential businesses and further strengthen our business and finances." PHOTOGRAPHERS TAKING PICTURES OF SASA SASA BOWING (SOUNDBITE) (Japanese) NEWLY NOMINATED PRESIDENT HIROYUKI SASA SAYING: "I believe that it's first necessary to have a business plan, but once that has been fully debated then if it is necessary then I would think about it (outside investment)." OLYMPUS SIGN AND NEWS CONFERENCE IN PROGRESS (SOUNDBITE) (Japanese) INDEPENDENT DIRECTOR HIROSHI KURUMA SAYING: "By having someone from the financial sector work as the chairman we believe it is possible to further strengthen Olympus' financial base. On the other hand, although he is from the financial sector, that does not mean that he will not fully work for the company's duty as chairman." NEWS CONFERENCE IN PROGRESS
- Embargoed: 14th March 2012 12:00
- Keywords:
- Location: Japan, Japan
- Country: Japan
- Topics: Business,Industry,Science / Technology
- Reuters ID: LVAAPMJA1A7U117MI3PPJCAB18FK
- Story Text: Japan's Olympus Corp proposed a new board of directors on Monday (February 27) in an effort to recover from a 1.7 billion U.S. Dollar (USD) accounting fraud, but the line-up could face a hostile reception from foreign investors when it goes to a shareholder vote.
The maker of cameras and medical equipment said it had nominated an insider, executive officer Hiroyuki Sasa, to become president and former banker Yasuyuki Kimoto as chairman, subject to approval at its April 20 shareholders' meeting.
"The mission I have been given is to restore the damaged brand and people's trust. In order to do so, it is important not to let this sort of problem happen again, it is necessary to reform the business from the ground up and to look over our essential businesses and further strengthen our business and finances," Sasa told reporters.
Sasa said on Monday the company would come up with a business strategy before considering capital tie-ups, and that its project team was still mulling a restructuring plan.
"I believe that it's first necessary to have a business plan, but once that has been fully debated then if it is necessary then I would think about it (outside investment)," he said when asked about possible investment.
Olympus has been considering alliance offers to shore up its finances, with the likes of Japanese electronics firms Sony and Fujifilm believed to be among suitors.
But current President Shuichi Takayama reiterated this month that any tie-up decisions must wait until after the April shareholder meeting. He has also suggested that going it alone without seeking outside capital was an option.
Newly nominated chairman Kimoto was formerly an executive of Sumitomo Mitsui Banking Corp, Olympus's main lender and a unit of Sumitomo Mitsui Financial Group Inc (SMFG). He is now president of Japan Research Institute, an SMFG think-tank.
Olympus also nominated as a board member Hideaki Fujizuka, a former executive of Bank of Tokyo-Mitsubishi UFJ, which is another Olympus creditor and a unit of Mitsubishi UFJ Financial Group Inc.
That falls short of major foreign shareholders' demands for fresh, outside talent in these two key positions and could also stoke fears among some investors that Olympus' creditors will use the chairman's role to call the shots in the boardroom.
Olympus' independent director Hiroshi Kuruma however tried to downplay those fears and assure that strong connections to creditors were needed to help keep Olympus on a firm financial footing.
"By having someone from the financial sector work as the chairman we believe it is possible to further strengthen Olympus' financial base. On the other hand, although he is from the financial sector, that does not mean that he will not fully work for the company's duty as chairman," Kuruma said.
U.S.-based Indus Capital has said creditors such as Sumitomo Mitsui Banking could push Olympus into a big, dilutive sale of new equity, which would be a comfort for lenders but not necessarily for existing shareholders.
Olympus's balance sheet has been weakened by the fraud, used to hide investment losses from its investors for 13 years before it was uncovered in October. But Indus and a few others believe it can recover without a big new share issue.
Sasa had worked as head of development as well as marketing at Olympus Medical Systems Corp, the group's medical equipment business which accounts for most of its profits. Olympus dominates the global market for diagnostic endoscopes.
By contrast, its ailing camera business as well as tax asset writedowns have dragged Olympus into the red, with the company forecasting a 32 billion yen (397 million USD) net loss in the financial year ending March 31.
Shares of Olympus, which have lost nearly half their value since former chief executive Michael Woodford blew the whistle on the scandal, closed down 3.3 percent at 1,373 yen ahead of the announcement. - Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2012. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None