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Takata said to rule out bankruptcy as it seeks funds from buyer
[TOKYO] Takata Corp has ruled out using bankruptcy as a way of mitigating liabilities from its record air-bag recalls and is instead seeking buyers that could take a controlling stake and carry the company through its safety crisis, a person with knowledge of the restructuring process.
Lazard Ltd, Takata's financial adviser, will meet manufacturers as well as financial firms with the aim to find buyers by the fall, according to the person, who asked not to be named because the discussions are private. A consortium of investors is also an option to raise funds, said the person. Takata spokeswoman Akiko Watanabe declined to comment.
Takata's plan is to remain listed and maintain its core seat-belt, air-bag and steering-wheel businesses, while selling off non-core operations, the person said. In exchange for injecting capital, the founding family's stake will be diluted, the person said. The company has targeted having new management in place this year, replacing executives including President Shigehisa Takada, the person said.
Talks with potential buyers are at the preliminary stage and no offers have been made, the person said. Takata is negotiating with customers led by Honda Motor Co over how much of the multi-billion-dollar recall bill it will have to pay. Takata's shares have declined 68 percent during the past year, cutting its market value to about 36.4 billion yen (S$454 million), or less than one-tenth the company's 2007 peak.
Takata is willing to be flexible with the restructuring plan as long as its top objective of supplying replacement air bags in a stable manner is met, the person said. Japan last week ordered that 7 million more vehicles have their air bags replaced, expanding the total number recalled in the country to about 19.6 million. Regulators earlier this month forced carmakers to recall as many as 40 million more air bags in the US, which would more than double the total to about 69 million.