Takata to Sell All Assets to KSS for $1.59 Billion
Takata, which is facing lawsuits and huge recall costs, has been accused of hiding the problem with its airbags for years. Carmakers have recalled almost 70 million of the company's air bags in the United States, in 42 million vehicles, as well as millions overseas.
Takata'sbankruptcy filing will make it more challenging for automakers to recoup the cost of repairing millions of vehicles with defective air bags.
Even so, Key Safety, the world's fourth-largest air bag maker bought by Ningbo Joyson previous year, would gain greater access to Japanese automakers and the combined entity would pull closer in market share to leader Autoliv Inc.
GM added that does not anticipate any supply disruptions as a result of Takata's bankruptcy.
The issue was attributed to the nitrate-based propellant used by the airbags' inflating system, which is prone to explode after prolonged exposure to hot and humid conditions.
The company has filed for bankruptcy protection both in the USA and in Tokyo.
Over 100 million cars fitted with the unsafe airbags have since been recalled, however an unknown number are still on the road.
At least $1 billion from the sale to Key is expected to be used to satisfy Takata's settlement of criminal charges in the USA for concealing problems with the inflators.
As part of the Takata bankruptcy, the company is selling off the majority of its business.
When he wrote email to his colleague, he was referring to an October 16, 1999 event in which a prototype Takata air bag inflator ruptured, the engineer stated.
Takata recently pleaded guilty in a US court to criminal charges for its handling of the scandal, agreeing to pay $1 billion in penalties, including the fund for people injured as a result of the fiery shrapnel hurled from its air bags. The deal includes a $25 million criminal fine, a $125 million victim compensation fund and $850 million to be paid to automakers.
Takata's bankruptcy filing clears the way for most of its assets to be taken over by Key Safety Systems, a Chinese-owned company based in suburban Detroit.
The CEO of Takata, who has long pushed back the scenario of bankruptcy, refused to let go the reins, officially welcomed the choice of KSS, "an ideal takeover". A federal grand jury also indicted three Takata executives for their role in the scandal in January. Toyota, Subaru, Mazda and BMW will reimburse out-of-pocket expenses, provide loaners to some vehicle owners and set up an outreach program to increase participation in recalls, according to court papers filed May 18. And in 1990, Takata produced its first air bag.
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