(Reuters) - Olympus Corp directors approved the purchase of Gyrus Group’s preferred stock from a firm that advised the Japanese company’s takeover of the British medical products maker, for more than three times the original price just two months after the shares were issued, the Nikkei business daily said.
Olympus admitted last week that it hid losses on securities investments dating back two decades, bowing to weeks of pressure to explain a series of baffling transactions that have put the future of the firm in doubt.
The latest revelation is an indication that Olympus, which has admitted to paying inflated prices for various acquisitions to reroute funds and hide massive investment losses, planned from the start to use the share issuance by Gyrus to generate funds for the cover-up, the Nikkei said.
In September 2008, Gyrus issued 176.98 million yen of preferred stock — worth about 19 billion yen ($246.9 million) at today’s exchange rates — to the advisory firm as part of the compensation for services rendered during its acquisition by Olympus, the daily said.
In November, Olympus’ board approved a buyback of the very same shares for 530-590 million dollars — more than triple the issue price. Olympus ended up buying the preferred stock for 620 million dollars — worth about 66 billion yen today — at the end of March 2010, the daily said.
Olympus’ management at the time said the revaluation was justified by an increase in Gyrus’ corporate value.
($1 = 76.950 Japanese Yen)
Reporting by Durba Ghosh in Bangalore