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Takata Declines by Daily Limit as It's Said to Plan Bankruptcy

  • Shares of the component maker have plunged 53% this year
  • Company says awaiting external committee’s final proposal

Takata Corp. fell by its daily limit after the embattled airbag maker was said to be planning to file for bankruptcy, paving the way for a sale of the 84-year-old Japanese company behind the biggest safety recall in automotive history.

Shares of Takata declined 17 percent, the most since April 27, at the end of trading Monday in Tokyo after going untraded through the regular session as orders to sell outnumbered buyers. The stock has plunged 53 percent this year. The supplier is expected to seek protection in its home country first, with its U.S. subsidiary filing for Chapter 11 bankruptcy shortly thereafter, a person familiar with the matter said last week.

Bankruptcy filings would put Takata a step closer to a sale to Key Safety Systems Inc., the U.S. air-bag maker owned by China’s Ningbo Joyson Electronic Corp. A Takata steering committee has recommended Key Safety as the preferred bidder for the manufacturer of faulty air bag inflators linked to at least 17 deaths worldwide. Mounting liabilities from having to replace more than 100 million of the devices forced Takata to seek an acquirer that could help see through a costly restructuring.

Takata has not made a decision on court-led restructuring and all options are on the table, the company said late Friday in a statement. The company will make a decision quickly after receiving a final proposal from the outside panel set up to oversee restructuring, it said.

Bonds Slide

The component maker’s bonds slid to record lows on Friday. Its notes due on Dec. 15 this year dropped 30 yen, the most ever, to an all-time low of 24 yen on June 16, according to the latest available data compiled by Bloomberg. Its securities due in 2021 slid 20 yen to 21 yen.

A bankruptcy filing would mark the end for a Japanese company that started as a textile maker and produced parachutes for the Imperial Japanese Army during World War II. Honda Motor Co., a Takata shareholder and the component maker’s largest customer, first started recalling Accord and Civic models in 2008 due to the air-bag flaw that may end up being Takata’s undoing.

The supplier’s air bag inflators use a propellant that can be rendered unstable after long-term exposure to heat and humidity, leading them to rupture and spray deadly metal shards at vehicle occupants. More than a dozen automakers have recalled vehicles, including Volkswagen AG, Toyota Motor Corp. and General Motors Co., because of the faulty inflators.

Takata would stop making air-bag inflators after it completes production of replacement parts and fulfills existing supply contracts for them with automaker clients, Reuters reported last week. Takata has repeatedly said it’s in the process of reviewing its inflator business and a consortium led by Key Safety will also involve Daicel Corp., a Japanese maker of inflators that would participated as a production partner.

Takata on Monday declined to comment on the Reuters report.

Automakers that have used Takata’s air bags still need an uninterrupted supply of parts to replace air bags in markets around the world.

Honda Chief Executive Officer Takahiro Hachigo said at a media briefing on Friday that the manufacturer hasn’t heard any specifics about the Takata bankruptcy plan. “I’d like to refrain from commenting because I’m not aware,” he said. “We have told the third-party committee to make sure to prioritize parts procurement.”

— With assistance by Kevin Buckland, and Masatsugu Horie

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