As Takata Corp works toward a deal for financial backing from U.S. auto parts maker Key Safety Systems Inc, it is preparing to file for bankruptcy as early as next week, reported Reuters citing sources from the Japanese company that is facing billions in liabilities stemming from its defective air bag inflators.
Takata has been working for months to complete a deal with Key Safety and is one of the world's biggest automotive suppliers.
As part of a restructuring in bankruptcy, Key was expected to acquire Takata, Reuters reported citing a person briefed on the matter.
A new company created under Key will continue supplying air bags, seat belts and other products, leaving liabilities behind in a separate entity after purchasing Takata operations for about 180 billion yen ($1.6 billion), the Nikkei business daily reported.
There were no comments from either Michigan-based Key, owned by Chinese supplier Ningbo Joyson or Takata.
Following media reports of preparations for a bankruptcy filing, it had suspended trading in shares of Takata, the Tokyo Stock Exchange said on Friday. It had a market value of $360 million at its previous close.
Stemming from the automotive industry's largest ever safety recall, Takata owes to major global automakers under a settlement agreed to earlier this year, a sum of $850 million which is also at stake.
Before Takata files for bankruptcy, a final deal with Key may not be reached, sources familiar with the matter said. Media sources also said that in both the United States and Japan, the company plans to begin proceedings.
Because of disruption it could cause to the production of replacement air bag inflators, concerns about the company filing for bankruptcy without a deal in place have bene expressed by major global car manufacturers. In the United States repairing work is still incomplete for more than 65 percent of 46.2 million recalled Takata air bag inflators.
The costs of replacing all of the faulty Takata inflators could be $8 billion, a U.S. judge said earlier this year.
Unleashing metal shrapnel inside cars and trucks, Takata inflators can explode with excessive force.
In order to resolve a U.S. Justice Department investigation into ruptures of its air bag inflators linked to at least 16 deaths worldwide, Takata agreed to plead guilty to criminal wrongdoing and to pay $1 billion in January.
For criminal wrongdoing in connection with the safety defect, three former Takata executives have been indicted by a federal grand jury in January.
To a victims' compensation fund, including for future incidents, Takata has already paid a $25 million fine and $125 million. within five days of securing a financial backer or until early 2018 is the time that remains for Takata to pay the $850 million owed to automakers.
The Justice Department would be a creditor in the restructuring if Takata filed for bankruptcy, the then-U.S. Attorney Barbara McQuade said in January.
As the favored buyer for the company, Key was chosen by Takata earlier this year. Key has been working with Takata on a restructuring plan since then.
(Source:www.reuters.com)
Takata has been working for months to complete a deal with Key Safety and is one of the world's biggest automotive suppliers.
As part of a restructuring in bankruptcy, Key was expected to acquire Takata, Reuters reported citing a person briefed on the matter.
A new company created under Key will continue supplying air bags, seat belts and other products, leaving liabilities behind in a separate entity after purchasing Takata operations for about 180 billion yen ($1.6 billion), the Nikkei business daily reported.
There were no comments from either Michigan-based Key, owned by Chinese supplier Ningbo Joyson or Takata.
Following media reports of preparations for a bankruptcy filing, it had suspended trading in shares of Takata, the Tokyo Stock Exchange said on Friday. It had a market value of $360 million at its previous close.
Stemming from the automotive industry's largest ever safety recall, Takata owes to major global automakers under a settlement agreed to earlier this year, a sum of $850 million which is also at stake.
Before Takata files for bankruptcy, a final deal with Key may not be reached, sources familiar with the matter said. Media sources also said that in both the United States and Japan, the company plans to begin proceedings.
Because of disruption it could cause to the production of replacement air bag inflators, concerns about the company filing for bankruptcy without a deal in place have bene expressed by major global car manufacturers. In the United States repairing work is still incomplete for more than 65 percent of 46.2 million recalled Takata air bag inflators.
The costs of replacing all of the faulty Takata inflators could be $8 billion, a U.S. judge said earlier this year.
Unleashing metal shrapnel inside cars and trucks, Takata inflators can explode with excessive force.
In order to resolve a U.S. Justice Department investigation into ruptures of its air bag inflators linked to at least 16 deaths worldwide, Takata agreed to plead guilty to criminal wrongdoing and to pay $1 billion in January.
For criminal wrongdoing in connection with the safety defect, three former Takata executives have been indicted by a federal grand jury in January.
To a victims' compensation fund, including for future incidents, Takata has already paid a $25 million fine and $125 million. within five days of securing a financial backer or until early 2018 is the time that remains for Takata to pay the $850 million owed to automakers.
The Justice Department would be a creditor in the restructuring if Takata filed for bankruptcy, the then-U.S. Attorney Barbara McQuade said in January.
As the favored buyer for the company, Key was chosen by Takata earlier this year. Key has been working with Takata on a restructuring plan since then.
(Source:www.reuters.com)
