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Toyota-affiliated Akebono Brake seeks relief from lenders

Japanese manufacturer sounds out automaker on cash infusion as US business falters

Missing out on orders from U.S. automakers has heavily dented earnings for Japan's Akebono Brake.
Missing out on orders from U.S. automakers has heavily dented earnings for Japan's Akebono Brake.   © Photo by Wataru Ito

TOKYO -- Japan's Akebono Brake Industry is seeking a capital infusion from top shareholder Toyota Motor and financial relief from bank lenders as it tries to turn operations around under a private workout scheme, Nikkei learned Tuesday.

The brake maker filed for an out-of-court turnaround process with a state-certified third-party body that day. Akebono, whose troubled American operations have weighed on its earnings, is already in talks with certain partner banks and aims to compile a rehabilitation plan by June.

The company announced Wednesday morning that it had sent documents to lenders requesting a moratorium on repaying loan principal. It will hold its first meeting with lenders on Feb. 12 to set out a recovery plan. 

Akebono has also approached Toyota about a possible capital increase. Toyota, its chief customer, held a stake exceeding 11% in Akebono as of September.

Earnings took a beating at the Japanese brake manufacturer after it failed to secure orders for new models from U.S. automakers. In its April-September earnings report, Akebono cited "material doubts" about its ability to continue as a "going concern" due to troubles at North American operations. Prospects for repaying interest-bearing debt, which totaled 108.3 billion yen ($990 million) as of Sept. 30, are now uncertain.

Operating profit for the half plunged 43% on the year to 2.4 billion yen on sales of 126.4 billion yen, down 7%.

The workout scheme it filed for Tuesday -- alternative dispute resolution, introduced in Japan in 2007 -- targets only claims held by banks, in contrast to broader court-led procedures, and so will not affect accounts receivable held by suppliers.

Japanese enterprises that have tapped this private workout for rehabilitation include finance company Aiful, apparel seller Edwin and Tabuchi Electric.

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