Takata Slumps as Bankruptcy Said to Be Weighed With Law Firmby
Air-bag maker says ensuring stable supply its top priority
Talks on various options are ongoing, Takata says in statement
Takata Corp. fell the most in three weeks in Tokyo trading after it was said to be considering bankruptcy protection in the U.S. The air-bag maker said no decision has been made.
Takata dropped 7.5 percent to 347 yen, while the benchmark Topix Index advanced 0.4 percent. The Tokyo-based company, whose defective air-bag inflators triggered the biggest recall in auto industry history, hired Weil Gotshal & Manges LLP to help weigh options that could include bankruptcy or a sale, according to people with knowledge of the matter.
The Japanese manufacturer may choose to seek court protection just for its U.S. unit, said one of the people, who asked not to be named because the discussions are private. No final decisions have been made and Takata continues to seek buyers, the people said. Takata said its biggest commitment now is providing stable supply of products and its talks with related parties about various options are ongoing.
Takata is evaluating at least five bids as it confronts the potentially massive cost of recalling faulty airbag inflators that could exceed 100 million worldwide, as well as lawsuits tied to at least 16 deaths and more than 100 injuries. Its air-bag propellant can degrade over time and lead inflators to rupture, sending shrapnel through the vehicle’s cabin.
The company hired Lazard Ltd. earlier this year as its financial adviser to pursue strategic options including a sale. All of the suitors have proposed bankruptcy proceedings as one option for Takata, with airbag makers Autoliv Inc. and Key Safety Systems Inc. insisting on that in their bids, a person familiar with the process said last month. Additional offers came from Daicel Corp. and Bain Capital LP, and from buyout firm KKR & Co. and bumper supplier Flex-N-Gate Corp.
Takata’s customers, which include Honda Motor Co., General Motors Co. and Volkswagen AG, are tied to the outcome because they could face partial responsibility for billions of dollars in recall costs and potential legal liabilities. Automakers have been reluctant to help pay Takata’s legal bills, but they also want to ensure a steady supply of airbags, seat belts and other components.