Takata declines by daily limit as airbag maker said to plan bankruptcy

TOKYOTakata 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%, the most since April 27, at the end of trading yesterday in Tokyo after going untraded through the regular session as orders to sell outnumbered buyers. The stock has plunged 53% this year.

The supplier is 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 Inc, the US airbag 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 last 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.

The component maker’s bonds slid to record lows last Friday. Its notes due on Dec 15 this year dropped ¥30 (RM1.15), the most ever, to an all-time low of ¥24 on June 16, according to the latest available data compiled by Bloomberg. Its securities due in 2021 slid ¥20 to ¥21.

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.

Honda CEO Takahiro Hachigo said at a media briefing last Friday that the manufacturer hasn’t heard any specifics about the Takata bankruptcy plan. — Bloomberg