Tokyo's stock exchange has warned scandal-hit Olympus Corp it will be delisted after 62 years as a publicly traded company if it fails to report earnings by December 14, deepening concerns about the camera-maker's future. Olympus said it was unlikely to issue results by an earlier November 14 filing date, but it aimed to meet the later deadline, averting a delisting that its largest foreign shareholder, Southeastern Asset Management, said would have "vast negative ramifications" for foreign investment in Japan.
Southeastern, which owns about 5 percent, has called for an extraordinary meeting of shareholders to sweep out all the remaining directors and its internal-audit board after the company admitted on Tuesday to a decades long cover-up of securities losses that is being investigated by authorities in Japan, Britain and the United States.
Tokyo police will also look into the scandal, the Yomiuri newspaper reported on Thursday. The report said police had asked Olympus for internal accounting documents and it would question Olympus executives to determine if financial laws were violated. Olympus received a letter from shareholders on Wednesday calling upon it to sue 21 former and current executives for $1.8 billion if it finds they were in breach of their duties over the affair.
Josh Shores, a principal at Southeastern Asset Management, agreed that the responsible directors, not the company itself, should be sanctioned, protecting the sound parts of Olympus "for the good of the public, the staff, not to mention the shareholders".
The scandal, which erupted on October 14, has raised doubts about the outlook for the once-venerable company, which has since lost more than $6.7 billion, or 80 percent, of its value. Experts said the only future for the 92-year-old firm might be a take-over, though 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 investment expert 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."
Olympus has to delay its November 14 earnings announcement because its external auditor, Ernst & Young ShinNihon, will not have the information needed to sign off on the accounts, sources with knowledge of the matter said. The auditor would want to wait for an independent panel appointed by Olympus to complete a review and the expected restatement of past earnings before signing off on its latest results, the sources said. The Tokyo Stock Exchange said it had placed Olympus on a supervisory list and demanded the company report earnings by mid December or be delisted.
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