Oct 12, 2016

    Takata shares dented by bankruptcy reports


    TAKATA shares nosedived yesterday following reports that the Japanese airbag maker, hit by the car industry's biggest-ever safety recall, was considering filing for bankruptcy in the United States.

    With Tokyo investors returning from a three-day weekend, the stock fell nearly 11 per cent at the start before ending the day at 347 yen, down 7.46 per cent.

    The drop was a response to a Wall Street Journal report that the company was weighing a US bankruptcy filing "as one option". It is facing huge compensation costs over a defect linked to 16 deaths and scores of injuries globally.

    The firm may seek court protection only for its US division, Bloomberg News reported, citing sources familiar with the matter.

    Some 100 million Takata airbags have been recalled due to the defect, which can send metal and plastic shrapnel from the inflator canister hurtling towards drivers and passengers when an airbag is deployed.

    The US National Highway Traffic Safety Administration has said the risk is greatest in hot and humid regions of the US, such as Florida, Texas and the Gulf Coast.

    Most of the deaths have been in the US and Malaysia.

    Some carmakers in Japan are worried a bankruptcy filing could threaten Takata's access to operating funds and disrupt their airbag supplies, the Journal report said.

    Last month, the firm's shares dived after Bloomberg News said private equity firms and car parts makers were preparing offers for the company, and some were considering the drastic bankruptcy action to mitigate the liabilities.

    The Tokyo-based company - one of the world's biggest car parts suppliers - is now considering bids from US buyout firm KKR & Co and bumper supplier Flex-N-Gate among others.

    Takata's customers, including Honda, Volkswagen and General Motors, could face billions of dollars in costs linked to the recall and legal liabilities.