Takata shares plummet on bankruptcy fears
Tokyo — Takata shares dived 16.5% on Monday in response to news reports that the troubled airbag maker is planning to file for bankruptcy.
The stock in the finished the day at ¥404 ($3.60), tumbling by its maximum daily loss limit on the Tokyo Stock Exchange.
The supplier was expected to seek protection in its home country first, with its US 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, the US airbag maker owned by China’s Ningbo Joyson Electronic. A Takata steering committee has recommended Key Safety as the preferred bidder for the manufacturer of faulty airbag 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 had not made a decision on court-led restructuring and all options were on the table, the company said late on Friday in a statement. The company was awaiting the final proposal from the outside panel set up to oversee its restructuring, and would make a decision quickly once it received the proposal, it said.
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 the Second World War.
Honda, a Takata shareholder and the component maker’s largest customer, first started recalling Accord and Civic models in 2008 due to the airbag flaw that may end up being Takata’s undoing.
The supplier’s airbag 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 car makers have recalled vehicles, including Volkswagen, Toyota. and General Motors, because of the faulty inflators.
Takata would stop making airbag inflators after it completes production of replacement parts and fulfills existing supply contracts for them with car maker clients, Reuters reported last week. Takata has repeatedly said it is in the process of reviewing its inflator business and a consortium led by Key Safety will also involve Daicel, a Japanese maker of inflators that would participate as a production partner.
Takata did not immediately reply to a request for comment Monday.
Car makers that have used Takata’s airbags still need an uninterrupted supply of parts to replace airbags in markets around the world.
Honda CEO Takahiro Hachigo said at a media briefing on Friday that the car maker had not 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 prioritise parts procurement."