Woodford in the mood to battle for Olympus

The ousted British chief executive of Japan’s Olympus yesterday set out his stall in a bid to return to the helm, promising to recapitalise the troubled firm without compromising its independence.

Michael Woodford was speaking after Olympus revealed that years of hiding loses had left it dangerously under-capitalised, prompting speculation that it might have to seek a tie-up with another company.

The Briton has assembled an alternative management for the company and says he has enough shareholder support to have a “realistic chance” of ousting the current board in what could turn into a battle between Japanese and foreign investors.

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He said he would recapitalise the camera and medical equipment maker within a few months if he returned and would favour investment by private equity or a rights issue to raise cash.

“You have to look at improving the capital structure of the company,” he said. “Because of the litigation risk, you couldn’t do that publicly, so you have as options a strategic alliance, private equity or a rights issue.”

He said a strategic alliance would lose Olympus its independence, “which I think the employees most of all would not like”.

Olympus president Shuichi Takayama has said he may sell assets or accept a capital tie-up to bolster the capital base, while rumours are rife of takeover interest from private equity and rivals such as Fujifilm and Hoya.

Woodford, who rose to become one of Japan’s few foreign chief executives after 30 years at Olympus, was fired in October after just two weeks in the job for questioning a number of shady deals on the firm’s books.

He immediately went public, speaking to police, prosecutors and journalists and forcing the once venerable 92-year-old firm to admit it had hidden losses with expensive acquisitions of three Japanese companies with little or no relevance to its main businesses, as well as a huge payment for financial advice in 2008.

He has since waged a vigorous campaign for reform at the company and is now appealing to shareholders to support his comeback as part of a complete board renewal.

The current board has committed to resigning over the scandal, but wants to choose its own successors before quitting, setting up the prospect of a proxy war between its own candidates and those being assembled by Woodford as part of his campaign.

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Woodford, who is backed by big foreign shareholders including Southeastern Asset Management, Harris Associates and Baillie Gifford & Co, said: “The shareholding balance is such that there is a realistic chance we could win a proxy fight.”

But he added that such a battle would cause a split between foreign and Japanese shareholders and he hoped it could be avoided.

He said he would finally abandon his efforts to change the company if he lost a proxy fight for control.