Japan's Olympus Corp may be able to recover from a huge accounting scandal without having to bring in new investors, even as it looks to beef up its capital by around $3 billion over the longer term, its likely new president said on Tuesday.

The maker of medical equipment and cameras has been badly weakened by the $1.7 billion fraud, one of Japan's worst corporate scandals, which has put the company under pressure to raise fresh equity to put its finances on a more stable footing.

Hiroyuki Sasa, nominated to take over the reins this month of the disgraced firm, confirmed reports that Sony and direct rivals Fujifilm and Terumo were among potential partners willing to invest equity in Olympus.

But Sasa, a veteran Olympus executive and a controversial choice for some investors as the firm's next president, said in an interview he might not need to go ahead with an alliance or any kind of share issue, despite the need to shore up the balance sheet.

Strengthening capital through our own efforts is among the options ... though we are considering all options, he said.

Using free cash flow to nurse Olympus back to health would be likely to please some major foreign shareholders, who have voiced concerns that the firm's Japanese banks want to pressure the board into making a big, dilutive issue of new shares.

These shareholders have pinned their hopes of a go-it-alone strategy on Olympus' profitable core medical-equipment business, which has held up well since the scandal broke last October.

Sasa said Olympus had met some of the foreign shareholders. Asked if he was confident he could bridge the gap between Olympus management and foreign shareholders, he added: We believe so, and are doing our best to explain to them.

But he stressed he was also keeping all his options open, including allocations of shares to a third party and public share offerings, given the state of the balance sheet.

Sasa did not say how much the firm needed to beef up capital immediately, but said he would aim to boost the equity ratio from just 4.4 percent as of December - equal to 40.6 billion yen ($495 million) - to around 30-40 percent, a goal that would be detailed in the firm's mid-term to long-term business plan.

That would imply an additional 240 billion yen ($2.93 billion) to 330 billion yen ($4.02 billion), based on the balance sheet as of December 2011.

Sasa declined to clarify the time-frame to realize this goal and said it would be outlined in the business plan, which the firm hoped to compile as early as May.

On average, other firms in our industry have about 30 to 40 percent equity ratio. Therefore, we would like to bring ours to that level, he said at Olympus headquarters in central Tokyo.

STILL IN CRISIS MODE

Our sense of crisis has not wavered, said Sasa, whose nomination flew in the face of foreign shareholders' calls for a complete renewal of management.

We face risks such as the strong yen, the European economic crisis and shareholders' lawsuits following the scandal, and based on these we need to decide what to do.

Three former Olympus executives, including a president and chairman, Tsuyoshi Kikukawa, have been blamed for leading the 13-year-old fraud which hid more than $1 billion in investment losses from the company's published accounts.

Until a new board is elected at an extraordinary shareholder meeting on April 20, Olympus is still being supervised by many of the board members who presided over the scandal. The board had also sacked last year the only director who had internally queried the accounts, then chief executive Michael Woodford.

To rebuild the firm, Sasa said he would review its business portfolio that had spanned widely over the years - partly due to the elaborate fraud, which involved some sham acquisitions.

But he ruled out, for now, selling Olympus' loss-making digital camera business.

We have been reflecting on the fact that under the goal of growth, Olympus tried to do too many things ... We are thinking about what to do with various companies that we ended up being saddled with, the 56-year-old said.

Sasa is currently an executive officer who has worked as the head of development and marketing at Olympus Medical Systems Corp, the core medical equipment business which controls about 70 percent of the world market for diagnostic endoscopes.

These endoscopes are used to peer inside people's bodies to detect stomach and intestinal cancers and other illnesses.

Major foreign shareholders, such as U.S. fund managers Southeastern Asset Management and Indus Capital, have criticized the proposed new board, focusing much of its criticism on the nominee for chairman, former banker Yasuyuki Kimoto.

Kimoto formerly worked for Olympus' main lender, Sumitomo Mitsui Banking, which is also a major shareholder.

($1 = 82.0400 Japanese yen)

(Additional reporting by Maki Shiraki; Editing by Linda Sieg and Mark Bendeich)

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