Key Safety Systems chosen as favored buyer of Takata, report says
Key Safety Systems Inc. has been selected as the favored buyer for embattled Japanese airbag supplier Takata Corp., Reuters reported late Friday, citing three sources with knowledge of the process.
The Nikkei Asian Review first reported the story earlier Friday.
Reuters and Nikkei both reported that an external turnaround committee told automakers that Key Safety, a manufacturer of airbags and seat belts owned by China's Ningbo Joyson Electronic Corp., is the best option to take on the ailing supplier.
Officials from Key Safety could not be reached in the U.S. for comment after the report emerged. A Takata official declined to comment.
The selection signals an end may be near for the nearly eight-month quest to find a buyer for Takata, which agreed to pay $1 billion in fines and restitution in the U.S. tied to its airbag inflators that are linked in the deaths of at least 16 people globally and more than 180 injuries.
The U.S. Attorney's Office in Detroit announced the plea deal earlier this month, which also involved pleading to a criminal charge. Three former Takata executives in Japan were indicted on fraud and conspiracy charges, but it remains unclear whether the U.S. will seek extradition.
Who's in charge?
Takata, whose subsidiary TK Holdings Inc. is based near Detroit in Auburn Hills, Mich., quietly parted ways with two top executives and the general counsel at its North American unit and the company isn't saying who is now running the unit. More than one-third of Takata's $5.4 billion in automotive revenue is generated in North America, according to the Automotive News list of the top 100 global suppliers.
Former Takata North America President Kevin Kennedy and former Executive Vice President Robert Fisher are no longer with the company, according to their LinkedIn profiles and a former Takata insider with knowledge of the situation. It was unclear whether the two executives were terminated or resigned, although the former insider said the departures were "sudden and unexpected."
Globally, Takata faces up to $10 billion in potential liabilities for the ongoing recalls, penalties and settlements, according to some analysts. Takata was negotiating with other potential buyers -- including market leader Autoliv Inc. of Sweden -- in Japan last month and wants to avoid using court protection to complete the sale.
Acquiring Takata could be a boon for Key Safety, which employs 12,000 worldwide, including 300 in Michigan, with revenue of more than $1.4 billion in 2014. The deal would potentially make Key Safety the largest airbag maker in the world.
How the restructuring of Takata will be executed is not known yet. People with knowledge of the ongoing discussions have told Reuters that no decision has been made on the details of Takata's restructuring.
Potential bidders for Takata have favored a court-led turnaround of its Japanese operations, which would cap their exposure to Takata's existing liabilities, estimated by some analysts to be as high as $10 billion for recall costs alone.
Such an option could deal a huge blow to shareholders, including the founding Takada family, a major investor.
Last week, the company in a statement said it opposed a court-led restructuring, which it says could disrupt its supply-chain and impact its ability to pay suppliers.
The company is considering a bankruptcy filing for its U.S.-based unit TK Holdings, sources told Reuters.
Separate sources have told Reuters that automakers, which have been footing most of the recall costs, remain divided over whether a restructuring process should be court-ordered or a privately-arranged agreement.
While a court-ordered process would ensure transparency in identifying Takata's liabilities and offer automaker clients legal cover when convincing shareholders to approve any deal, sources told Reuters carmakers may stand to recoup more recall costs from Takata under a turnaround plan arranged out-of-court.
A senior executive at Honda Motor Co, Takata's biggest customer, on Friday declined to comment to Reuters on its preference for a restructuring plan, but said any agreement should make the stable supply of replacement parts a priority.
Reuters and Automotive News contributed to this report.
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