Takata shares fall after bankruptcy reports, KKR dropping out of bidding

A billboard advertisement of Takata Corp is pictured in Tokyo.
A billboard advertisement of Takata Corp is pictured in Tokyo. PHOTO: REUTERS

TOKYO (Bloomberg) - Takata Corp. shares fell to an almost six-month low on Friday (Nov 4) after reports that KKR & Co dropped out of bidding for the company and that the air-bag maker may be preparing for a U.S. bankruptcy filling.

The shares fell as much as 5.8 per cent to 323 yen as of 10:24am in Tokyo trading, headed for the lowest close since May 11.

There have been no new developments since Oct 11, when Takata last issued a statement in response to reports it was considering bankruptcy, the company said Friday in a statement to the Tokyo Stock Exchange. The parts maker said it will disclose information when it's available and is working to resolve its recall issues.

Takata hired Lazard earlier this year as its financial adviser to pursue strategic options including a sale after regulators in the U..and Japan ordered expansions of recalls that were already the biggest in the auto industry's history. Potential suitors Autoliv Inc, Key Safety Systems Inc., Flex-N-Gate Corp and Daicel Corp - bidding along with Bain Capital - have proposed bankruptcy for Takata's US unit as a way to limit liabilities, people familiar with the process have said. KKR has dropped from the bidding, the people said.

The company's air bags use a propellant that can be rendered unstable after long-term exposure to heat and humidity, leading their inflators to rupture and spray deadly metal shards at vehicle occupants. At least 17 deaths have been linked to the defect in the US, Malaysia and India.

At meetings in New York last week, Autoliv, Key Safety Systems and Flex-N-Gate dropped their proposals for Takata to also file for bankruptcy in Japan, after automakers expressed concern about the potential disruption for sub-suppliers.  Only the Daicel-Bain pairing is still putting forth the measure, the people said. Daicel shares plunged as much as 19 per cent to 1,101 yen, their biggest decline on record. The company cut its fiscal year operating profit forecast on Wednesday.

Regulators have ordered recalls scheduled into 2019 that could eventually exceed 100 million air bags used by more than a dozen automakers, including Honda Motor, Volkswagen and General Motors. The automakers have a vested interest in who ends up taking over Takata because they've already shouldered billions of dollars in repair costs.

A bankruptcy filing by TK Holdings, Takata's US unit, could help the Tokyo-based company find a buyer and continue supplying parts while seeking an out-of-court reorganization, the Nikkei reported on Friday.