KTM Restructuring Plan Accepted By Creditors - Must Pay €548 Million By May 23rd

By David Emmett |

KTM have taken the biggest hurdle on the way back from insolvency. At the hearing held by the insolvency court, the administrator Dr. Peter Vogl announced that a majority of KTM's creditors had accepted their plan to repay 30% of the debt and continue as a going concern.

Under the plan, KTM AG will have to pay 30% of the debts, a total of €548 million, by May 23rd this year. The creditors agreed to have the remainder of the debt written off. In addition, KTM have secured another €50 million in funding from Pierer Mobility shareholder Bajaj Auto to restart production from the middle of March this year.

Though KTM were confident of their plan being restructured, there were still doubts over whether it would happen. A US-based hedge fund Whitebox had bought up KTM debt in the hope of pressuring the Austrian motorcycle manufacturer into repaying a larger share of the debt. They were partially successful in that endeavor, Pierer Mobility agreeing to repay the 30% of the debt within a couple of months, instead of the two years allowed under Austrian insolvency law.

That was just part of the ramping up of speculation and rumor surrounding the fate of KTM. Austrian news website OE24.at even published a story with quotes from 'an insider at KTM' that BMW was looking to take over the debt and acquire KTM, then move production out of Austria. This appears to have been more an attempt to pressure Austrian politicians and creditors to accept the deal, rather than risk losing KTM altogether, with massively negative consequences for the region around Mattighofen. An acquisition by BMW is unlikely to happen, as it would require the approval of BMW AG's executive board, which is not due to meet for several more weeks.

There is no official news as to exactly where KTM will find the €548 million in funding, though at an extraordinary shareholders meeting in January, Pierer Mobility agreed to issue bonds and shares against extra investment. Whether Stefan Pierer, through Pierer Industrie AG, will lose overall control of KTM will only become clear once that funding has been secured.

Hearings are also due on Tuesday afternoon for the other two subsidiaries in insolvency proceedings, KTM F&E (Research and Development) and KTM Components. But if the KTM AG deal has been accepted, that increases the chances that the other two deals will also be accepted.

It is too early to tell what this means for the future of KTM Factory Racing. But all the signs are at the moment it will continue. For the 2025 season, the riders and teams are all safe. 

Read the official statement by Pierer Mobility AG on their corporate website.

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Comments

I hope they've got a very good plan. Half a billion euro for an enterprise on the edge. A big number has been slashed to a big number. I also cropped off another big number by rounding down to half a billion. He shouldn't stand a chance of retaining anything but the memories.

That is as a good a result as KTM could hope for in managed adminstration. I doubt creditors would have got as much back had they gone to the wall.

The whole thing stinks. For the sake of the sport I hope it all works out in some form of bikes on grid. I also hope the workers keep their jobs, plants stay open, production remains in Europe etc. However, it should not exist in any form of relation to Pierer. 

Is this similar to what the entire mountain bike industry is going through? Sales went through the roof during Covid, so production ramped up to suit, but nobody had the foresight to see that it was unsustainable, and once everybody had a brand new bike, then basically sales floundered? Greed won the battle over common sense? 

It's exactly what happened to mountain biking. A vast amount of money was borrowed on the assumption that the spike in sales was permanent and that would cover the debt. Of course it wasn't and now everyone is losing their shirt.

Begs the question what Stefan and chums were thinking. After 30 years in charge he'd seen enough booms and recessions to know how this goes, or so you'd think.

You may be on to something, Funsize. A virus is a biological entity that invades the cell of a host and forces it to rapidly produce thousands of copies of the original virus. What was the virus at KTM? The business plan of more, more, more. That virus infected the collective mindset at the KTM factory and thousands of copies of unwanted KTM motorcycles were produced and are now sitting in showroom floors and warehouses.

 

Understandably the major focus here is on the racing operation. Generally when sporting teams are surrounded by this level of turmoil, it negatively affects their on field/on track performance. Sometimes the performance can remain unaffected and on occasion the outside pressures even enhance performance - but I reckon the probabilities are that, at best, KTM's efforts will remain scratchy at best this year. (Which, one might say, is no change). There are already reports of reduced resourcing around the Moto3 efforts too. As for the rest of the story, the amount of money lost, the build up of what is currently reported as 295,000 bikes, the quality control fails really does mean that the previous leadership needs to be sent to manage a dealership in Siberia. The only people worth our empathy in this story are the workers, the current KTM owners and the Moto riders and crews.