Bill Pugliano, Getty Images
A Takata prototype build team member sews an airbag at the company’s crash-testing facility outside Detroit.

Takata Shares Plunge on Bankruptcy Fears

Feb. 6, 2017
Two days after Key Safety Systems emerged as the leading restructuring sponsor, shares of the embattled airbag maker dropped the daily maximum on speculation that it might have to go through court-led bankruptcy.

TOKYO — The volatile shares in Japan’s troubled Takata took another hammering Monday on fears for its future after a report that the airbag maker’s creditors want it to go through a court-led bankruptcy.

On Saturday, the firm announced Chinese-owned Key Safety Systems emerged as the leading restructuring sponsor following a recommendation from the committee tasked with overseeing its turnaround, but Takata said it had not yet made a decision on the deal.

Reports said the plan was also presented to automakers that are among Takata’s largest creditors, but the Nikkei business daily reported their support was on condition that Takata pursues a court-mediated turnaround in both Japan and the United States.

Tokyo-listed shares in the firm dived 18.65%, its maximum daily limit, to 436 yen ($3.88) by the close.

“Investors are more worried about court-controlled restructuring than the latest reports about Key Safety Systems,” said Hideyuki Suzuki, head of investment information at SBI Securities.

The company’s share price has swung wildly in recent weeks on a series of contradictory headlines surrounding its fate.

Takata prefers a private company-sponsored turn-around over a court-mediated bankruptcy restructuring, saying any court-led process could affect its ability to supply customers with parts and “compromise” its obligations. “That would create a huge burden on the company’s wide range of stakeholders,” the Tokyo-based auto parts maker said in a statement late last month.

Sweden’s Autoliv, the world’s leading airbag manufacturer, and a consortium led by Key Safety Systems, are reportedly vying for control of Takata.

The recall of more than 100 million airbags has affected almost every major automaker. 

The problem is linked to a defect that can cause safety devices to inflate with excessive force, sending shrapnel from the inflator canister hurtling towards drivers and passengers. It has been linked to at least 16 deaths and scores of injuries worldwide.

Last month, Takata agreed to plead guilty to fraud and pay $1 billion to settle the issue with U.S. regulators. The United States has also indicted three former Takata employees in the case, bringing the first criminal charges in the scandal.

Copyright Agence France-Presse, 2017

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