A plan to sell Takata to a rescuer, slated by year-end, is likely to extend into next year as some bidders want to drag the air bag maker through bankruptcy to wipe out most of its debt, sources have told the Reuters news agency.
Creditors such as Honda Motor are likely to resist any bailout that includes bankruptcy because they would have to accept significant losses, the sources said, adding the likely tussle could take months to resolve.
Go deeper with GlobalData
Takata faces about JPY1 trillion (US$10bn) in costs to recall potentially faulty air bag inflators worldwide, according to market estimates plus likely legal liabilities related to the inflators which have been linked to at least 14 deaths, mainly in the United States.
The firm received bailout bids from five groups last week. Its steering committee hopes to name a sponsor next month and complete restructuring plans by December, the sources said.
But that timeline is overly ambitious, they said, given the need to agree on how to share the losses among Takata's many stakeholders, which include creditors and both Japanese and foreign vehicle makers.
See Also:
A spokesman representing Takata's steering committee declined to comment to Reuters.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataOne source said an investor was unlikely to be confirmed unless Takata filed for bankruptcy, which would establish the extent of liabilities.
Bidders include inflator maker Daicel in partnership with US buyout firm Bain Capital, and US air bag maker Key Safety Systems which is likely to team up with US private equity firm Carlyle Group the sources said. US buyout firm KKR & Co has also bid, they added.
The Reuters sources said one means of securing an investor would be to wipe out current shareholders by devaluing equities to zero and allowing the sponsor to control 100% of Takata.
Lawyers specialising in corporate restructuring, who are not involved in the Takata deal, told the news agency such a scenario would be easier if the company seeks bankruptcy.
