Japan's airbag giant Takata files for bankruptcy

Tokyo: Japan's crisis-hit car parts maker Takata said Monday it has filed for bankruptcy protection and its chief executive would quit, after a deadly airbag defect triggered the auto industry's biggest ever safety recall.

The Tokyo-based firm is facing lawsuits and huge costs over the problems that are linked to at least 16 deaths and scores of injuries globally.

The scandal has involved almost every major global automaker, including top client Honda, which has already written down significant costs linked to the crisis.

American auto parts maker Key Safety Systems (KSS), owned by China's Ningbo Joyson Electronic, will take over Takata for an estimated $1.58 billion, both companies said Monday.

Takata's chief executive Shigehisa Takada, whose grandfather started the company in 1933 as a textile maker, said he would resign once the takeover was complete.

"I apologise from the bottom of my heart for causing trouble to all the people concerned and creditors who gave us their support and cooperation," Takada said, adding that he would resign at the "appropriate time" when the business changes hands.

News reports have said Takata's liabilities would exceed one trillion yen ($9 billion). Immediate confirmation was not available.

Trading in Takata shares was suspended at the opening of the stock market Monday after a week of wild volatility and the Tokyo exchange said it would delist the firm on July 27.

'Underlying strength'

"At a board meeting on June 26, our company decided to begin procedures in filing for bankruptcy protection," Takata said in a statement after making the filing with the Tokyo District Court. It said the court had accepted the measure.

Takata has 12 overseas subsidiaries that have also filed for bankruptcy protection.

Little-known outside Japan, Takata evolved from a small factory into an automotive parts giant in the Eighties.

It has dozens of plants and offices in 20 countries, including the US, China and Mexico. The airbag division has accounted for more than a third of total annual revenue around 663 billion yen, with seatbelts and steering wheels among its other key products.

Jason Luo, president and chief executive of KSS, voiced confidence in Takata's rehabilitation.

"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," he said in a statement.

There were no immediate plans to reduce Takata's 46,000-employee headcount or close factories as part of the deal, he added.

"The proposed structure for the potential transaction is intended to minimise transaction risk and supply chain disruption concerns for Takata's (automaker) customers," Luo added.

However, operations linked to the defective airbags will not become part of the combined company, which "will be run by reorganised Takata... and eventually will be wound down".      

Billion-dollar fine

Takata shares soared more than 40 percent on Friday after collapsing over the week as traders made bets on its likely bankruptcy.

Analysts attributed the upsurge on Friday to speculative trading among short-term investors hoping to profit from wild swings in share prices as well as to position adjustments ahead of the weekend.

Millions of airbags produced for some of the largest automakers, including Toyota and General Motors, are being recalled because of the risk that they could improperly inflate and rupture, potentially firing deadly shrapnel at the occupants.

Nearly 100 million cars, including about 70 million in the United States, were subject to the recall.

The ultimate cause of the malfunctions has not yet been identified but three factors are suspected: a chemical component, ammonium nitrate, that responds poorly to humidity; extreme climatic conditions, such as heat and high humidity; and faulty design.

Takata has already agreed to pay a billion-dollar fine to settle with US safety regulators over its airbags, and the company was heavily criticised for staying largely silent as the crisis grew.

Takata's major automaker clients reportedly support the bankruptcy filing plan.

The scandal-hit firm and some of its car customers are facing legal claims they knew about the problem and kept silent about it.