Takata mulls bankruptcy for U.S. unit, filing will take time: source

Fri Nov 4, 2016 6:22am EDT
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By David Shepardson and Naomi Tajitsu

WASHINGTON/TOKYO (Reuters) - Japan's Takata Corp is considering a bankruptcy filing for its U.S. unit as the air bag maker looks for a sponsor to help pay for liabilities related to its faulty inflators, a person briefed on the matter told Reuters.

Takata has been working to choose a financial backer for its turnaround as it faces huge costs related to the global recall of millions of potentially faulty inflators. A company-appointed steering committee has retained investment bank Lazard Ltd as an adviser for the process.

The company is struggling to supply replacement parts for the potentially defective inflators, which have been linked to at least 16 deaths worldwide, mainly in the United States, and have led to the industry's largest ever recall, with about 100 million ordered to be withdrawn globally.

A Chapter 11 filing for its U.S. unit, Michigan-based TK Holdings, which accounts for nearly half of Takata's global sales, was one option it was considering although no filing was expected soon, the source said.

A filing would not be imminent because the company still had to select a sponsor and finalize terms, and reach an agreement with automaker creditors, the source said.

Takata on Friday reiterated its eagerness to reach an agreement with its automaker customers over the restructuring, ideally by year end, although it added that any decision ultimately would be made by the steering committee.

"Our preference would be to restructure debts through an out-of-court settlement with creditors. This has been our position since the start, and has not changed," Takata CFO Yoichiro Nomura told reporters at a results briefing.

"Aside from that, we're open to all options."   Continued...

A sign with the TAKATA logo is seen outside the Takata Corporation building in Auburn Hills, Michigan May 20, 2015. REUTERS/Rebecca Cook/File Photo