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Scandal-hit Takata shares jump as boss hints at resignation

Tuesday, June 28, 2016 - 18:41
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Takata shares jumped on Tuesday after the airbag supplier's boss said he would resign once the company recovers from a scandal linked to at least 13 deaths and scores of injuries globally.

[TOKYO] Takata shares jumped on Tuesday after the airbag supplier's boss said he would resign once the company recovers from a scandal linked to at least 13 deaths and scores of injuries globally.

The Tokyo-listed stock soared as much as 10 per cent in early afternoon trade after chief executive Shigehisa Takada told the annual shareholder meeting that he would step down from his family company, before trimming those gains.

The shares ended 2.17 per cent up at 375 yen (S$4.96).

"Once I'm convinced the company is back on track, I will pass the baton (to new management), which is my role," he told the closed meeting, according to a company spokeswoman.

The firm, one of the world's biggest auto parts suppliers, declined to comment on any timeframe for its top executive's resignation.

Mr Takada was widely criticised for his handling of the crisis, rarely appearing in public even as the company plunged deeper into trouble.

Shareholders at the meeting Tuesday reported that executives were peppered with angry questions about their response to the scandal, which has sparked the biggest auto industry recall in US history.

"I don't think the president is qualified for his post," a 66-year-old shareholder told reporters outside the meeting.

Ahead of the meeting, another investor told AFP: "They have to put an end to the damage that has been done. I want to hear management's thinking on its responsibility."

Takata is facing lawsuits, investigations and huge compensation costs over a defect that can send metal and plastic shrapnel from the airbag's inflator canister hurtling toward drivers and passengers when an airbag is deployed.

At least 13 people have died in accidents linked to the defect and scores more have been injured, while the crisis has sparked the recall of some 100 million airbags worldwide.

The Nikkei recently reported that US private equity firm Kohlberg Kravis Roberts (KKR) was looking to buy a majority stake in Takata, which reported a 13.08 billion yen net loss in its latest business year.

On Monday, Honda said an airbag made by Takata exploded after a minor crash in Malaysia where the driver was killed after suffering chest injuries.

It was still awaiting the official cause of death, Honda added.

In morning trade, Takata's shares had plunged more than eight per cent in response to the announcement from Honda, which is Takata's biggest airbag customer and the worst-affected automaker in the crisis.

Most of the fatalities have been in the US, including a Texas teenager who died in March after her 2002 Honda Civic collided with another car, activating a defective Takata airbag.

Investigators increasingly suspect that the chemical used to inflate the airbags can be unstable, especially in hot and humid conditions, and cause the inflator canister to rupture.

Last year US safety watchdog slapped Takata with a record US$200 million fine as it accused it of supplying inadequate and inaccurate information about the problem airbags to regulators.

AFP