Economy

Key Safety Systems To Buy Takata's Assets For $ 1.57 Billion

Key Safety Systems To Buy Takata's Assets For $ 1.57 Billion”

Japan's Takata Corp, the firm at the centre of the auto industry's biggest ever product recall, filed for bankruptcy protection in the United States and Japan and said it would seek $1.6 billion (1 billion pounds) in aid from US -based Key Safety Systems (KSS). Drowning in a sea of lawsuits and recall costs, Japanese air bag maker Takata Corp.is expected to seek bankruptcy. As part of the bankruptcy protection plans, KSS would acquire all of Takata's assets barring certain assets and operations related to the airbag inflators involved in the global recall in the planned deal, the two companies said. That includes 69 million in the USA, affecting 42 million vehicles. Eventually they were forced to recall tens of millions of vehicles.

Takata was heavily criticised for its handling of the public relations crisis, but some say its automaker clients also dragged their feet on dealing with the snowballing scandal.

News reports have said Takata's liabilities would exceed one trillion yen ($9 billion).

Japanese airbag maker Takata Corp has filed for bankruptcy protection in the United States and Japan.

Kay Safety Systems' purchasing of Takata would not affect the recall, and the airbag inflator replacements will continue as scheduled.

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

Takata's shares are to be delisted from the Tokyo stock exchange next month.

As the public continues to observe the bankruptcy proceedings, be sure to check if your vehicle could be part of the recall.

Seventeen carmakers, including BMW AG and Tesla Inc., were listed as unsecured creditors with unknown claims related to recalls and indemnification, according to the filing.

More news: HighVista Strategies LLC Purchases 300 Shares of Eastman Chemical Company (EMN)

Honda now uses no Takata-sourced inflators for recall repairs in the USA, and none of the company's new vehicles in mass production worldwide use Takata inflators with ammonium nitrate propellant, said Chris Martin, a Honda spokesman in the U.S.

The air bags defect stems from use of the explosive chemical ammonium nitrate in the inflators to deploy the air bags in a crash. The chemical can deteriorate when exposed to hot and humid air and burn too fast, blowing apart a metal canister.

In January Tokyo-based Takata agreed to pay $1 billion in penalties in the United States for concealing risky defects.

That settlement will speed the removal of faulty inflators from 15.8 million vehicles and compensate consumers for economic losses, he said.

Other issues remain unresolved, with Honda, Takata's biggest customer, saying it had reached no final agreement with the firm on responsibilities for its recall.

Jason Luo, president and chief executive of KSS, which is owned by China's Ningbo Joyson Electronic, voiced confidence in Takata's rehabilitation. Its global headquarters and US technical center is in Sterling Heights, Michigan.

The bankruptcy filing will likely leave most of the financial burden on them without getting much paid back by Takata.

Takata says on its website that its products have kept people safe, and it apologizes for problems caused by the faulty inflators. But both Takata and Honda said it was "an anomaly" and didn't disclose the danger of exploding airbags for years.

The airbag scandal has led to a slow and painful demise for Takata, which started out as a textile manufacturer more than 80 years ago and later came to specialize in seat belts and other auto safety equipment.



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