Tokyo Exchange Sets December Deadline for Olympus Delisting

by CFO Innovation Staff, 11 November 2011

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The Tokyo Stock Exchange sent an ultimatum to Olympus to submit its second quarter earnings report by 14 December – or else it would be delisted. The 92-year-old camera and medical equipment maker failed to release its results on 8 November as originally scheduled.

A delisting will be a blow to the company, which has been a public firm since 1949, particularly to its shareholders. As of March 31, they include the Government of Singapore Investment Corporation, US asset management firm Harris Associates, Nippon Life Insurance, Bank of Tokyo-Mitsubishi and Sumitomo Mitsui Banking.

Olympus has said it would try to release the results by 14 November, but now says it is unlikely to meet that internal deadline. An independent panel it named last week is still going through company records after discovering that three senior executives, including board chairman Tsuyoshi Kikukawa, have been hiding Olympus’s investment losses for decades.

Kikukawa had fired British-born Michael Woodford as president and CFO after Woodford questioned advisory and other payments totalling more than US$1 billion connected with the takeover of British firm Gyrus Group and three small Japanese companies. Olympus admitted on 8 November that the payments were used to retire part of the investment losses.

Securities watchdogs in Japan, Britain and the US are investigating. According to the Yomiuri newspaper, Tokyo police have asked Olympus to provide internal documents and will question its executives. Those found to have violated securities laws face imprisonment of up to ten years.

Quoting its sources, Reuters news agency reports that the November 14 announcement was delayed because Olympus’s external auditor, Ernst & Young ShinNihon, want to wait for the independent panel to complete its work before signing off on the financial results.

Olympus has a 70% share of the global market for endoscopes, a medical imaging device that is widely used to examine body organs and cavities. The company had sales of US$11 billion last year and was trading at 2,482 yen (US$32) before Woodford’s 14 October ouster.

With the threat of a delisting hanging over the company, the counter plunged to 484 yen on 10 November, with sellers far outnumbering buyers. Investors have lost some US$6.7 billion on the market value of the shares since the sorry saga began.

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CFO Innovation Staff

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Excellent brief coverage.

Submitted by Michael Chong on 23 November 2011 - 10:40am

Excellent brief coverage.

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