KTM's Restructuring Confirmed: 30% Assignment for Creditors
KTM's Comeback
After a tumultuous ride, Europe's largest motorcycle manufacturer, KTM, is back on track. The Regional Court of Ried im Innkreis has greenlit the rehabilitation plan, as announced by Pierer Mobility AG, the parent company. Creditors received a whopping 30% of their claims as promised. "Now our priority is to crank up production by the end of July and realign the group," said Gottfried Neumeister, CEO of Pierer Mobility, with a confident glint in his eye.
In May, the Indian conglomerate Bajaj Auto International Holdings B.V. snatched the reins of the insolvent Austrian motorcycle giant. In return, Bajaj pumped in a cool €600 million, preventing KTM from going under the hammer.
KTM found itself in a pickle in November 2024, thanks to a devastating plunge in demand and an inventory mountain that wouldn't budge. The aftermath of the COVID-19 pandemic had left its mark, and KTM was struggling to navigate through the volatile market conditions.
During its downturn, KTM's board and Pierer Mobility worked tirelessly on a restructuring plan. The plan required KTM to cough up €600 million to creditors by May 2025, as approved by the Ried im Innkreis Regional Court. The pressure was on, with several banks threatening legal action if payments were delayed.
Bajaj Auto, a significant shareholder and co-owner of Pierer Mobility alongside Austrian entrepreneur Stefan Pierer, played the knight in shining armor. Bajaj negotiated a staggering £580 million loan from banking heavyweights like JPMorgan, DBS, and Citigroup to fuel KTM's restructuring efforts. This financial influx enabled KTM to meet the court-ordered payment and secure the restructuring plan.
With the liquidity requirements met, KTM's restructuring administrator gave the green light, paving the way for the court's official approval of the restructuring plan by mid-June 2025. Creditors got their due, and KTM steered clear of bankruptcy, concluding its restructuring proceedings under legally binding orders. Bajaj Auto's timely intervention and backing were the driving forces behind KTM's rebirth.
In the aftermath of KTM's restructuring, the focus of the business shifts towards growth. Bajaj Auto, a significant shareholder, has strategically invested in KTM's finance, aiming to bolster the industry's motorcycle manufacturing capacity.
