* Woodford drops 3-mth battle to return to lead Olympus
* Says was unable to win over big Japan shareholders
(Adds detail, background)
By Tim Kelly
TOKYO, Jan 6 The ousted CEO of Olympus
Corp, Michael Woodford, said on Friday he is calling a
halt to his three-month battle to replace the management of the
scandal-tainted Japanese endoscope maker and to return to lead
the battered company.
Despite uncovering accounting fraud at Olympus that revealed
hidden losses of $1.7 billion the executive whistleblower failed
to win over big Japanese shareholders including the firm's main
lenders, which continue to support a board that has been blamed
for failing to provide proper oversight.
"Despite my having done the right thing, none of the major
Japanese institutional shareholders have offered one word of
support to me," Woodford said in a statement sent by email to
The decision by Woodford, who was fired as chief executive
in October, leaves foreign shareholders, who want a new slate of
directors, including U.S. fund manager Southeastern Asset
Management, without a champion to lead any proxy battle when the
company convenes an extraordinary shareholders meeting as early
Woodford said he would brief the media at 1500 JST (0600
The company's main lender and major shareholder Sumitomo
Mitsui Financial Group (SMFG) is backing existing
management led by CEO Shuichi Takayama, which is seeking a
capital tie up with a rival company to bolster its finances.
It's net assets are dangerously thin after it corrected its
accounts to include the effects of its 13-year fraud.
Shareholder equity was just 42.9 billion yen ($556 million)
at the end of September, or just 4.5 percent of total assets -
less than a quarter of what is seen as a healthy cut-off. A 20
percent proportion of equity would imply that it needs to raise
about 150 billion yen in fresh equity.
Local media has reported that Sony, Fujifilm
Holdings and Panasonic Corp are among the
candidates that may ride to the rescue of Olympus.
Japan's big banks such as SMFG and Mitsubishi UFJ Financial
Group are often cornerstone investors in Japanese blue
chips, with major equity and debt holdings. That puts them in a
powerful position to influence board decisions.
In a sign lenders are in the driving seat at Olympus, the
company appointed industrialist Shiro Hiruta, with connections
to SMFG, as the head of an outside panel to advise the firm on a
Hiruta was formerly head of chemicals firm Asahi Kasei
, which has close ties to SMFG, the biggest lender to
Olympus with 227.5 billion yen ($2.95 billion) in outstanding
loans and bonds, according to company data and sources.
The bank, which declined a request from Woodford for a
meeting, also holds a 3.4 percent equity stake in Olympus.
"The cross-shareholding system in Japan, while clearly
serving the country well in the years following the Second World
War is in today's world harmful," Woodford said in his
"Such a compliant approach removes one of the essential
safeguards in relation to governance and also allows the boards
of companies which are underperforming to remain in office," he
($1 = 77.1100 Japanese yen)
(Reporting by Tim Kelly; Editing by Michael Watson and Joseph