Olympus Says It Broke Covenants on 320 Billion Yen in Loans

Olympus Corp. (7733) said it violated covenants related to 320 billion yen ($4 billion) in loans as it delayed and restated earnings reports last year after admitting to accounting fraud.

The maker of cameras and medical probes will have to pay a higher-than-normal fee to amend the covenants, according to a person familiar with the matter, who asked not to be identified because the details are private. Miho Uratani, a Tokyo-based spokeswoman for Olympus, declined to comment on any discussions with lenders.

The company plans to make the payment, normally between 20 basis points and 30 basis points of the total interest amount, by the end of September and is in talks with banks, the person familiar with the matter said today. Olympus, which has about $5.8 billion of bonds and loans due to mature before the end of 2019, restated earnings last year after admitting it paid inflated fees on takeovers and overpaid for three Japanese companies to conceal past investment losses.

The yield on Olympus’s 25 billion yen of 2.15 percent notes due 2018 rose 1 basis point to 5.855 percent as of 3:38 p.m. in Tokyo, JSP prices compiled by Bloomberg show. The securities were yielding 5.76 percent as of July 2, the prices show. The yield on the company’s 20 billion yen of 1.58 percent notes due 2013 was little changed today at 4.53 percent.

Increased Loss

Olympus shares dropped as much as 2.8 percent to 1,425 yen in Tokyo trading immediately following the announcement today about covenant violations. The stock changed hands at 1,434 yen at the close of trading in Tokyo.

Separately, the camera-maker reported results today for the three months ended June 30.

Net loss widened to 4.5 billion yen in the three months ended June 30, compared with a 1.4 billion yen loss a year earlier, the company said today in a statement. Olympus left its forecast for annual net income of 7 billion yen unchanged.

The company’s new management team, led by a former Sumitomo Mitsui Financial Group Inc. (8316) banker Yasuyuki Kimoto, is considering alliance offers from Sony Corp. (6758), Fujifilm Holdings Corp. (4901) and Terumo Corp. (4543) after revelations of the fraud wiped more than $3 billion off its market value.

To contact the reporters on this story: Emi Urabe in Tokyo at eurabe@bloomberg.net; Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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