By TODD ZAUN
Staff Reporter of THE WALL STREET JOURNAL
TOKYO -- Bridgestone Corp. said it would set aside $450 million this
year to cover damage claims against its U.S. Firestone unit and flatly
rejected a media report that lawsuits over allegedly faulty tires could
bankrupt the U.S. subsidiary.
Reacting to a sharp decline in Bridgestone's
shares on Tuesday, company president Yoichiro
Kaizaki firmly denied a newspaper report that
legal claims against Nashville-based
Bridgestone/Firestone Inc. may reach $50 billion
and force the U.S. company to fold its
operations. Shares in Bridgestone fell 14% to
1,252 yen ($11.28), down 200 yen.
Bridgestone/Firestone "is not in a state of
insolvency" and has no plans to file for
bankruptcy, Mr. Kaizaki said. "We have not even
considered such a thing," he said at a news
conference in Tokyo.
Mr. Kaizaki said Bridgestone would continue to
support Firestone to help it recover from the
Aug. 9 recall of 6.5 million tires, most of which were sold with Ford
Motor Co.'s popular Explorer sport-utility vehicles. Failures of those
tires are allegedly linked to 119 deaths in the U.S. and more than 40
overseas, and Firestone faces a growing wave of lawsuits by accident
victims and their relatives.
Mr. Kaizaki refused to elaborate on how Bridgestone calculated its $450
million estimate for legal damages, saying only that "our accountants
and lawyers assure us this will be enough to cover damage awards."
The estimate would bring total costs related to the recall for
Bridgestone to $900 million for this year, Mr. Kaizaki said. Bridgestone
had already announced that replacing recalled tires with new ones would
cost $450 million. Firestone has reserves to easily cover the costs, Mr.
In addition to the direct costs, Firestone has suffered from bad publicity
surrounding the recall. Last month, Bridgestone said sales of Firestone
replacement tires for cars and light trucks fell about 40% in the U.S. in
September and October from a year earlier.
The Bridgestone share slide Tuesday in Tokyo was in response to a
report in USA Today that with a potential $50 billion in damage claims
piling up, lawyers suing Firestone fear the company may file for
bankruptcy. The lawyers are attempting to add the company's Japanese
parent company, Bridgestone, to their lawsuits, USA Today reported.
Ford and Firestone are preparing to brief U.S. National Highway Traffic
Safety Administration officials starting Dec. 11 on their investigations
into the root cause of the tire failures. The agency is trying to determine
whether Firestone should be forced to broaden its recall, which is now
limited to certain Wilderness AT, ATX and ATX II tires. Regulators have
said an additional 1.4 million tires of various sizes are dangerous and
should be included in the recall, but Firestone disputes that claim.
Write to Todd Zaun at email@example.com