TOKYO Japan's scandal-tainted Olympus Corp (7733.T) will not unveil an equity alliance at its major strategy briefing next month, despite speculation it might do so, sources said on Tuesday.
The maker of medical equipment and cameras is struggling to recover from a $1.7 billion accounting fraud which left it with a paper-thin equity ratio of 4.6 percent of total assets, as of end-March, after it corrected years of misleading accounts.
Olympus has considered bringing in a strategic investor to help rebuild its balance sheet, with Japanese firms Sony Corp (6758.T), Fujifilm Holdings Corp (4901.T) and Terumo Corp (4543.T) among possible candidates.
But some of Olympus's major foreign shareholders oppose this option, fearing a big share placement would dilute their holdings.
Sources familiar with Olympus's capital-management deliberations said no equity alliance was imminent, though Olympus had not ruled out bringing in a partner at some stage.
"It would be difficult to thrash out a capital tie-up with a partner in time for the announcement of the medium-term business plan," said a source with knowledge of the discussions.
An investment banking source added that Olympus management hoped it could eventually raise capital on its own.
Earlier, Jiji news agency said Olympus would announce a broader goal at its medium-term strategy briefing, expected to be called before its June 28 shareholders meeting, to boost its equity ratio to 20 percent over five years.
So far, Olympus has only given a target of rebuilding equity to 30 percent of total assets over an unspecified time frame.
An Olympus spokeswoman said the firm had nothing to add to comments it had already made on options for boosting capital.
Olympus President Hiroyuki Sasa said this month the company would consider all options to boost capital, including equity tie-ups and third-party share allocations.
Olympus had been concealing investment losses for 13 years when suspicions of fraud surfaced last October, when the firm's then British chief executive, Michael Woodford, blew the whistle on some unusual bookkeeping. It was later revealed that a small group of executives had been running the scheme to hide losses.
(Reporting by Miki Kayaoka, Reiji Murai, Taiga Uranaka and Emi Emoto; Editing Mark Bendeich and Linda Sieg)