Takata, short of cash, wants carmakers to share costs of its recall

Takata, the Japanese air bag maker embroiled in a huge recall, has hired the investment bank Lazard and is seeking a cash infusion.

In an announcement Wednesday, Takata said it had retained Lazard to lead its efforts in seeking new investment for Takata as part of a broader endeavor to bolster the company’s finances. It said it was also seeking to work out a deal with affected automakers on sharing the costs of replacing millions of air bags, a move it said was crucial to “enabling Takata to remain a viable and valued global supplier.”

At least 10 deaths in the United States and three overseas have been linked to Takata’s defective air bags, which can rupture, sending metal debris flying into the car’s cabin. More than 100 people have been injured.

Takata said earlier this month that it was looking for ways to restructure its business, including a possible overhaul of the division responsible for the millions of potentially dangerous air bag inflaters, as it grapples with the largest auto safety recall in history.

Analysts have said that Takata is at risk of bankruptcy without fresh capital from banks, a new investor or a buyer.

Yoichiro Nomura, Takata’s chief financial officer, said on May 11 that the company hoped to have a concrete turnaround plan in place by fall. Takata had appointed a committee of five lawyers and other corporate restructuring experts to advise it, he said. Lazard is the financial adviser in the steering committee.

The company’s hiring of Lazard to oversee a restructuring effort was reported earlier by The Wall Street Journal.

Takata is facing mounting financial costs related to its recall of more than 100 million air bags worldwide, as well as a flood of lawsuits from car owners and victims. Earlier this month, the Transportation Department and Takata confirmed that 17 automakers would recall up to 40 million air bag inflaters across the nation by 2019, on top of 28.8 million recalled previously.

Takata is also facing stiff penalties. In November, the National Highway Traffic Safety Administration announced a $70 million penalty for Takata for failing to promptly disclose defects in its air bags. That penalty could increase by $130 million if Takata does not live up to the terms of the consent order, a condition that would make it a record civil punishment for the auto industry.

In addition, Takata faces a criminal investigation by the Justice Department.

(THE ASAHI SHIMBUN)