Takata plea, compensation deal clears path to potential sale

Tue Feb 28, 2017 5:49am EST
 
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By Joseph White

DETROIT (Reuters) - Japan's Takata Corp (7312.T: Quote) removed a major obstacle to its potential sale or restructuring, pleading guilty on Monday in a U.S. federal court to a felony charge as part of a $1 billion settlement that included compensation funds for automakers and victims of its faulty airbag inflators.

U.S. District Court Judge George Steeh approved the previously agreed settlement, despite objections from lawyers for victims of Takata inflator explosions that the criminal settlement identified automakers as victims of fraudulent activity.

Steeh said automakers could be victims of Takata's decisions to hide evidence over 15 years that its inflators were defective and still be subject to civil litigation for harm done to individuals.

With the criminal settlement and penalties set in the United States, where the majority of air bag-related fatalities and injuries have occurred, Takata is expected to continue its search for a buyer or financial backer, a process which has dragged on for a year.

"Achieving a plea bargain in the United States shows some progress, and could help to revive stagnated talks in Japan," SBI Securities senior analyst Koji Endo said in Tokyo.

Any deal will require agreement with its automaker clients over whether Takata's restructuring should be managed privately, or through the courts, a sensitive issue for the founding Takada family, which holds a majority stake in the company.

Steeh said he considered imposing a stiffer sentence, noting federal guidelines allowed for up to $1.5 billion in fines. But the judge said he approved the settlement because Takata could otherwise be pushed into bankruptcy, delaying efforts to replace millions of potentially deadly inflators still on the road.

"Destruction of the corporation would probably have been a fair outcome in this case," Steeh said, adding he had been involved in a separate case in which Takata had admitted to price fixing.   Continued...

 
The logo of Takata Corp is seen on its display at a showroom for vehicles in Tokyo, Japan, February 9, 2017. Picture taken February 9, 2017. REUTERS/Toru Hanai