Deadline Time as Japan's Olympus struggles to Survive

(REUTERS)-Japan's scandal-ridden Olympus Corp faces one of its biggest challenges to survive as an independent company on Wednesday, when it must meet a deadline to file its second-quarter results or be delisted from the Tokyo stock exchange.

The 92-year-old maker of cameras and medical equipment has been engulfed by a $1.7 billion accounting fraud, one of Japan's worst corporate scandals, and has vowed to iron out its accounts in the eagerly awaited filing due later in the day.

If it fails to deliver its results to the Tokyo Stock Exchange, it would automatically lose its listing and be cut off from equity capital markets, a humiliation that would put it under pressure to sell off core assets.

Investors will be looking for restatements to Olympus' balance sheet and whether it will need to raise fresh equity, as well as whether auditing firms KPMG AZSA LLC and Ernst & Young ShinNihon LLC will sign off on the revised documents.

In addition to the second-quarter accounts, Olympus plans to release restated accounts for previous years.

Investors will also be eager to hear how its ousted British CEO, Michael Woodford, who blew the whistle on a 13-year cover-up of investment losses, is faring in his bid to return to the top job with his own slate of candidates for a new board.

Olympus shares at one point lost more than 80 percent of their value after the scandal broke in October, when the board sacked Woodford, who then went public with his concerns about some murky Olympus deals.

Since then, an outside panel commissioned by Olympus to probe the scandal has found that the deals were part of a fraud carried out by a few executives to hide losses stemming from risky securities investments in the late 1980s. Some of these losses were disguised in the accounts as acquisition payments.

The panel found no evidence of rumored involvement by organized crime syndicates in the scheme, although Olympus remains under investigation by police, prosecutors and regulators who are expected to step up their joint probe after the revised financial statements are announced.

Olympus shares have rallied from their lows in recent weeks on expectations that while some former executives face harsh punishment, the firm itself will avoid a delisting.

Now at about half its pre-scandal value, the stock closed about 5 percent higher at 1,370 yen on Tuesday.

Woodford, who arrived in Tokyo late on Tuesday for his second trip to Japan since he fled to Britain after being sacked, faces a battle with the current board in his campaign to return to the helm of the company.

The Olympus board plans to resign, but not before it picks its own slate of successors to present to a shareholders' meeting which could be held as early as February.

Woodford says the existing directors are too discredited to be in a position to choose their successors and he is assembling his own team of candidates to put to shareholders, with him as nominated CEO. He says he has backing from two big shareholders.

Those people who are described as 'yes-men' should not be choosing or having any influence on the future management of this company or any strategic decisions, Woodford told reporters on his arrival at Haneda Airport, Tokyo.

Woodford did not name the two big shareholders backing him but said they had approached Olympus president Shuichi Takayama on Friday to urge him to work with Woodford over the next six to eight weeks to select a new board.

That would avoid a proxy fight, all the destruction, all the inconvenience and the worry to so many people, Woodford said. And I was willing, and still am, to go along that route. But Mr Takayama's response, after considering it for an hour, was he was too busy to meet me this week.

Some big foreign shareholders have openly backed Woodford's come-back campaign, but the 51-year-old -- who was a rare foreign CEO before his sacking -- will have to win over employees as well as Japanese shareholders who worry he may not be the right man to lead the company back to health.

(Reporting by Linda Sieg; Editing by Mark Bendeich)