Japanese airbag maker Takata (KSS) has filed for bankruptcy protection in Japan and the United States. The move comes after faults in its airbags prompted the industry’s biggest ever safety recall.
US mobility safety supplier Key Safety Systems says it has reached an agreement in principle to sponsor a US$1.588 billion restructuring plan for the sale of substantially all of Takata’s global assets and operations subject to certain adjustments at closing.
Under the agreement, KSS will acquire most of Takata’s assets, except for certain assets and operations that relate to Takata’s manufacturing and sale of phase-stabilized ammonium nitrate (PSAN) airbag inflators. It is expected that Takata’s PSAN-related operations will be run by reorganised Takata following the transaction closing and eventually will be wound down.
Jason Luo, President and Chief Executive Officer of KSS, says “Takata has deep management talent, a dedicated work force and a long history of exceptional customer service. Although Takata has been impacted by the global airbag recall, the underlying strength of its skilled employee base, geographic reach, and exceptional steering wheels, seat belts and other safety products have not diminished. We look forward to finalising definitive agreements with Takata in the coming weeks, completing the transaction and serving both our new and long-standing customers while investing in the next phase of growth for the new KSS.”
Shigehisa Takada, Chairman and Chief Executive Officer of Takata, says “KSS is the ideal sponsor as we address the costs related to airbag inflator recalls, and an optimal partner to the company’s customers, suppliers and employees. The combined business would be well positioned for long-term success in the global automotive industry. Throughout this process, our top priorities have been providing a steady supply of products to our valued customers, including replacement parts for recalls, and a stable home for our exceptional employees. This agreement would allow that to continue.”
KSS says it has substantially completed its due diligence, and both parties are working towards finalising a definitive agreement in the coming weeks. Takata has determined that it is in the best interests of the company and its stakeholders to address the recall-related issues in conjunction with the proposed sale. Accordingly, with KSS as plan sponsor, proceedings have commenced under the Civil Rehabilitation Act in Japan and in the United States of America under Chapter 11 of its bankruptcy code. Subject to successful completion of the in court proceedings and other closing conditions, including certain regulatory approvals, KSS expects transaction closure can occur in the first quarter of 2018.