| TOKYO, April 14
TOKYO, April 14 Potential rescuers of Japan's
Takata Corp have extended talks, already in their 14th
month, for a deal to take over the air bag maker at the heart of
the auto industry's biggest safety recall, people briefed on the
Car-parts maker Key Safety Systems Inc (KSS) and Bain
Capital LLC are the preferred bidder for Takata, whose faulty
air bags have been blamed for at least 16 deaths worldwide.
Discussions that include the steering committee tapped by
the air bag maker to oversee the search for a financial sponsor,
automaker clients, suitors and bankers are now likely to run on
until at least end-May, three people told Reuters.
The parties have already moved beyond an informal,
self-imposed end-March deadline to thrash out a deal.
Recent talks, described by two participants as “chaotic”,
have focused on issues such as an indemnity agreement to cover
reimbursement costs for air bag recalls, estimated to be as high
as $10 billion.
KSS, a U.S.-based maker of air bags, seatbelts and steering
wheels, and Bain, a U.S. private equity fund, are still
conducting due diligence, one of those close to the matter said.
Another said KSS - which was bought last year by China's
Ningbo Joyson Electronic Corp - and Bain plan to
offer around 200 billion yen ($1.8 billion) for Takata.
A spokesman for Takata and the steering committee declined
to comment. A spokeswoman for KSS also declined to comment.
Automakers including Honda Motor Co, which have
been footing the bill for recalls dating back to 2008, want
Takata restructured through a transparent court-ordered process
such as bankruptcy, which would wipe out the firm's shareholder
value, four automaker sources have told Reuters.
"There's no other option," said one automaker executive. "A
privately arranged restructuring would require them to repay
billions. They can't afford that."
But Takata, the world's second-biggest air bag maker, is
holding out for a “private restructuring” that would preserve
some of the founding Takada family’s 60 percent stake.
The clock is ticking for Takata, whose stock has cratered 90
percent since the recall crisis began escalating in early 2014.
U.S. federal Judge George Steeh in February cited the
potential for Takata to collapse if it couldn’t find a buyer.
Takata pleaded guilty in Steeh’s District Court to a felony
charge as part of a $1 billion settlement with automakers and
victims of its inflators, which can explode with excessive
force, blasting shrapnel into passenger areas.
The company, which began as a textiles firm and became an
early maker of seatbelts, is also trying to settle legal
liabilities in the United States, where it faces a class-action
lawsuit, and other countries where its air bag inflators have
Takata has denied speculation it would have to seek some
form of bankruptcy protection from creditors in the United
States or Japan.
The company has not been allowed to simply disappear as the
auto industry needs it to keep producing the millions of
inflators needed to replace recalled air bags - though some
automakers have switched to rival suppliers.
Also, the government in Tokyo is keen to preserve a major
Japanese maker of air bags in a global industry dominated by
just three companies.
($1 = 108.8300 yen)
(Additional reporting by, Taro Fuse, Naomi Tajitsu and Junko
Fujita; Editing by William Mallard and Ian Geoghegan)