Business / Corporate

Struggling Akebono Brake seeks capital infusion from Toyota as well as debt relief

Reuters

Akebono Brake Industry Co. is seeking a capital infusion from top shareholder Toyota Motor Corp. and a moratorium on debt repayment as part of a revival plan, sending its shares tumbling by a quarter on Wednesday.

The brake-maker, a supplier to automakers including General Motors Co., which makes up about a quarter of Akebono’s sales, said in a statement it has filed for assistance with a government-certified third-party body which had been accepted.

Akebono, whose troubled U.S. business has hurt its earnings, said it was confident its operations would be turned around under an out-of-court plan and that it will present a revival plan to lenders at a meeting next month.

The Nikkei financial daily first reported Akebono’s move to seek capital from Toyota and a debt moratorium. A spokeswoman for Akebono told Reuters that “the content written in Nikkei is true.”

“We are not facing any financing issues at the moment, but we will prepare to seek assistance from our main lenders should such a situation arise,” the company said in a statement, which did not make mention of Toyota.

Toyota, which owned 11.6 percent of Akebono as of September, said in a statement it has not received a request from the brake-maker for capital assistance.

Founded in 1929, Akebono manufactures brakes and brake pads for passenger and commercial vehicles, motorcycles, rolling and industrial machinery. It operates plants in Japan, North America, Europe and Asia and generates roughly half of its sales from North America, its biggest market.

Besides General Motors, it also supplies Toyota, Nissan Motor Co. and other major automakers.

Akebono’s latest financial woes date back to around 2014, when the company was struggling to fill a surge in orders from customers in the United States, where vehicle sales were climbing to record highs.

The scramble to manufacture more products beyond its production capabilities resulted in additional manufacturing costs, including labor and shipping costs, leading to a three-year run of operating losses in North America to the 2016 financial year.

Years of production issues also led to a slump in sales in the region, as Akebono has failed to secure orders for new models from U.S. automakers.

Akebono’s shares fell as much as 26 percent on Wednesday to ¥158, their lowest in 17 years. The shares had slid more than 40 percent in 2018.

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