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Takata shares soar 18% on bankruptcy plan denial

2017-01-25 12:55

COMPLAINT FILED: Takata is facing criminal charges in Japan due its faulty airbags. Image: AP / Shizuo Kambayashi

Tokyo - Takata shares surged 18% on Wednesday after the embattled airbag maker denied it would enter into a potentially lengthy court-mediated bankruptcy restructuring.

The Tokyo-listed stock, which had lost more than half its value in the past week, jumped by its maximum daily limit to end at 519 yen, after the firm at the centre of the biggest-ever auto safety recall issued a statement on its turnaround plans.

The company said any court-overseen process could affect its ability to supply its automaker customers with parts and "compromise" its obligations.

Takata woes

"That would create a huge burden on the company's wide range of stakeholders," it said in a statement Tuesday.

Takata was responding to reports last week that two rival suitors will propose a potentially drawn-out overhaul for the scandal-hit firm.

The news sent its shares into free fall. The company lost more than half its market value in a week before Wednesday's rally.

"(The reports) caused confusion and are really regrettable," Takata said.

"The company is not planning to choose the option of rehabilitating itself through legal means."

Recall of 100-million airbags

Sweden's Autoliv, the world's leading airbag manufacturer, and a consortium led by US autoparts maker Key Safety Systems, are reportedly vying for control of Takata.

The recall of more than 100-million airbags, which has affected almost every major automaker, is linked to a defect that can cause the safety devices to inflate with excessive force, sending metal shrapnel from the inflator canister hurtling towards drivers and passengers.

The defect has been linked to at least 16 deaths and scores of injuries worldwide.

US government: Takata airbag recalls to cover 42-million cars

This month Takata agreed to plead guilty to fraud and pay $1-billion to settle the exploding airbag scandal with US regulators.

The United States has also indicted three former Takata employees in the case, bringing the first criminal charges in the scandal.

The individuals, who left the company in 2015, were charged with fraud for hiding the flaws in the airbags.

$25-million fine in the US

Under the terms of Takata's US deal, it will pay a $25-million fine, establish a $125-million fund to compensate victims and pay $850-million in restitution to affected automakers.

A Texas teenager died in March after a Takata airbag in her Honda Civic ruptured in a crash, sending a metal fragment into the side of her neck, according to media reports. A pregnant Malaysian woman suffered a similar fate in 2014.

US regulators have said the problem is more dangerous in southern parts of the United States and places with warmer and more humid climates.

In November 2015, the US National Highway Traffic Safety Administration imposed a record $200-million civil fine against Takata for providing inadequate and inaccurate information to regulators about the defect.

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Read more on:    takata  |  scandal  |  airbags  |  auto industry

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