Olympus may have to sell assets to survive scandal

TOKYO: Japan s Olympus has launched a review of its business structure, according to an internal memo, amid speculation that the 92-year-old company may have to sell assets in order to survive a massive accounting scandal.

The maker of cameras and medical equipment is also looking to reform its much-criticised corporate governance arrangements, and is setting up separate teams to supervise the two reviews, according to the November 28 memo.

"They will make clear the optimal business structure and the proper profit structure to promote the steady further development of our business," president Shuichi Takayama wrote in the memo to Olympus employees.

Olympus, under investigation by police and at risk of being delisted from the Tokyo market, is keen to protect its highly profitable endoscope business from any fall-out of the scandal.

So far, there is no sign the six-week-old scandal has disrupted Olympus s core $2.6 billion diagnostic endoscope business, which enjoys a near-monopoly worldwide. But this unit is housed in a group that is highly geared and that is expected to make major writedowns once its accounts are set straight.

The Nikkei business newspaper has reported that Olympus recently offered its creditor banks a plan to cut its debt by about ¥260 billion ($3.3 billion) over the next three years and might sell assets in order to do so.

Vow of revival
Olympus s camera business currently runs at a loss and it also has businesses in microscopes, the field where it started almost a century ago, industrial testing systems and mobile phones, a small division emerging as a key focus of Japanese authorities investigating the scandal.

Investment bankers say rivals in both the endoscope and camera markets are closely watching events unfold at the company, although prospective bidders are expected to stay on the sidelines until the situation becomes clearer.

Takayama vowed last week to set the company on a path to revival, even as it remains the target of investigations at home and abroad in one of Japan s biggest corporate scandals.

Japan s securities regulator, the Securities and Exchange Surveillance Commission (SESC), has launched an on-site investigation of Olympus to uncover details of its loss cover-up scheme, the Nikkei said on Tuesday.

Past mergers, acquisitions
The SESC will ask Olympus to submit in-house financial documents concerning past mergers and acquisitions, and will examine the processes in which investment losses were moved off the company s balance sheet, the daily reported.

Olympus spokesman Yoshiaki Yamada said he was unable to comment on investigations. Former Olympus president Masatoshi Kishimoto, however, has told a third-party investigative panel that he was unaware of efforts to hide losses when he was at the helm from 1993 to 2001, a key period in the saga, media reported.

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