Takata unit restructuring agreement calls for $1.59 billion asset sale

By Caroline Salls

Pittsburgh, Nov. 6 – Takata Corp. subsidiary TK Holdings Inc. requested court approval to enter into a restructuring support agreement with plan sponsor Joyson KSS Auto Safety SA and initial consenting original equipment manufacturers (OEMs), according to a motion filed Nov. 3 with the U.S. Bankruptcy Court for the District of Delaware.

The company said the agreed global transaction includes three purchase agreements for the sale of Takata’s global assets; an indemnity and release agreement between the OEMs and the plan sponsor, a plan sponsor backstop funding agreement and a global settlement agreement for Takata entities that are not subject to in-court proceedings.

According to the motion, the global transaction allows the TK Holdings debtors to continue to comply with their obligations to the National Highway Traffic Safety Administration (NHTSA), fulfilling a fundamental commitment laid out at the onset of its Chapter 11 cases.

Additionally, the company said the global transaction, including the plan terms agreed by the supporting parties, provides for the continued employment of substantially all of Takata’s employees and assumption or assumption and assignment of many of the debtors’ vendor and supplier contracts and purchase orders.

Under the plan support agreement, Takata Americas, TK Holdings, TK Mexico LLC, and TK Holdings de Mexico S de RL de CV will sell specified assets to Joyson KSS, including the stock of some subsidiaries, in exchange for the sellers’ share of a $1,588,000,000 global purchase price.

Assets used exclusively in connection with the research, development, design, manufacture, transportation, sale and support of PSAN will be vested, as will warehoused inflators and other excluded assets.

All administrative expense, priority and other secured claims will be paid in full.

Specified claims of the consenting OEMs will be settled.

A trust will be established to hold recovery funds for each of the debtors to administer claims, make distributions to holders of general unsecured claims and wind down the debtors’ estates.

The plan support agreement requires the company to obtain approval of plan sponsor protections, including a 3% breakup fee and expense reimbursement to be paid to Joyson KSS if TK Holdings proceeds with an alternate transaction, by Dec. 6 and to complete the global transaction by Feb. 27.

A hearing is scheduled for Dec. 5.

Tokyo-based Takata manufactures and sells motor vehicle seat belts, airbags, steering wheels, interior trims and child restraint systems. TK Holdings filed for bankruptcy on June 25 under Chapter 11 case number 17-11375.

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