TOKYO (Reuters) – All five bidders seeking to bail out Japan’s beleaguered Takata Corp <7312.T> have presented restructuring plans that require the air bag maker to file for bankruptcy protection, people with knowledge of the process told Reuters.
But some Japanese creditors have opposed such a filing as it would see them shoulder significant losses, the people said, declining to be identified as the proposals have not been made public.
Takata faces huge costs related to the global recall of millions of potentially faulty air bag inflators, and is seeking an outside investor to increase its capital. The company received proposals from five bidders last week.
The bidders include Japanese inflator maker Daicel Corp <4202.T> in partnership with U.S. buyout firm Bain Capital; U.S. private equity firm KKR & Co LP <KKR.N>; U.S. air bag maker Key Safety Systems, which is likely to team up with U.S. private equity firm Carlyle Group LP <CG.O>; Swedish auto safety group Autoliv Inc <ALV.N>; and U.S. autoparts maker Flex-N-Gate Corp, the people said.
Takata’s creditors include Honda Motor Co Ltd <7267.T> and Toyota Motor Corp <7203.T> in Japan, as well as foreign automakers such as General Motors Co <GM.N>, Volkswagen AG <VOWG_p.DE> and Fiat Chrysler Automobiles NV <FCHA.MI>.
Filing for bankruptcy protection is Takata’s only option to retain the bidders’ interest because a filing will reveal the extent of its liabilities, one of the people said.
Representatives from Takata, Daicel, KKR, Carlyle and Autoliv declined to comment. Representatives at Bain Capital and Flex-N-Gate could not be immediately reached for comment.
Takata faces about 1 trillion yen ($10 billion) in recall costs, according to market estimates. There is also the prospect of legal liabilities related to the inflators, which can explode with too much force, and which have been linked to at least 15 deaths, mainly in the United States.
“It is understandable that any potential sponsors want to reset Takata’s 1 trillion yen in debt through bankruptcy but it is hard to accept that,” said a senior official at a Japanese automaker.
Takata’s steering committee this week has been briefing officials from Japanese and foreign automakers on the five bidders’ proposals, the people said.
A senior official from a different Japanese automaker said both Japanese and foreign automakers would oppose Takata filing for bankruptcy protection.
Takata, which has retained investment bank Lazard Ltd <LAZ.N> as advisor, had 109 billion yen in capital as at the end of June. Its debt would exceed capital if it had to cover most or all of the recall costs. So far, its automaker clients have covered the costs.
($1 = 101.5000 yen)
(Reporting by Maki Shiraki and Junko Fujita; Editing by Christopher Cushing)