Takata tumbles after report company weighs U.S. bankruptcy filing

October 10, 2016 8:30 PM EDT

The logo of Takata Corp is seen on its display at a showroom for vehicles in Tokyo, Japan, May 11, 2016. REUTERS/Toru Hanai/File Photo

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TOKYO (Reuters) - Shares of Takata Corp <7312.T> fell sharply on Tuesday after The Wall Street Journal reported late last week that the troubled Japanese air bag maker is weighing a U.S. bankruptcy filing as one option for clearing a path for an outside investor.

Takata issued a statement on Tuesday saying the reported plan was not something it had announced. Markets were closed in Japan on Monday for a public holiday.

Citing people familiar with the matter, the Wall Street Journal said on Friday that Takata's U.S. arm would seek protection from creditors in a federal bankruptcy court under preliminary plans being discussed.

Takata, which has retained investment bank Lazard Ltd (NYSE: LAZ) as an advisor, has been working to choose a sponsor for its turnaround as it faces huge costs related to the global recall of millions of potentially faulty air bag inflators.

Reuters reported last month that all five bidders seeking to bail out Takata presented restructuring plans that require the company to file for bankruptcy protection.

Takata shares were trading down 6 percent in the morning session on Tuesday after intially falling as much as 10 percent.

(Reporting by Ayai Tomisawa and Taiga Uranaka; Editing by Chang-Ran Kim and Richard Pullin)

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