AUTONEWS

Pierer Mobility, the parent company of KTM, has announced a restructuring agreement with creditors

It's been months of bad news for KTM, with insolvency threats, layoffs, bikes sitting idle on dealer lots and the near-abandonment of its Moto GP racing program. The company also sold off MV Agusta just months after acquiring a controlling stake, as well as a number of other smaller brands. Stefan Pierer also stepped down as CEO, remaining only as "co-CEO."

All of this was due to a downturn in business, some really poorly executed business decisions and the poor timing of a myriad of actions.

But now, after all the turmoil, the billions of dollars in accumulated debt, the increasing production pauses and the back and forth between creditors, banks, potential investors and others, there is a result. No, BMW is not bailing out the struggling brand, as was the rumor just a few days ago. Nor was CEO Remus. The Indian company Bajaj was the one that saved KTM. But Bajaj wasn’t the only one. Oddly enough, the main party involved in saving KTM wishes to remain anonymous. I don’t know about you, but that sounds suspicious.

According to AKV, the Austrian company that is helping KTM with its restructuring process, the “restructuring plan of KTM AG has been accepted by the creditors.” The press release adds that this restructuring will involve paying only 30% of its creditors’ claims, which must be paid to the restructuring administrator by May 25. This amounts to about $630 million of the company’s nearly $3 billion in debt.

In the restructuring plan, the investors are planning to send the group about $800 million to continue the brand, with $630 million to pay off creditors and the rest to restart operations. Some of this money has already been received. About $52 million, to be exact, and that amount came from Bajaj, the Indian brand that already has deep ties to KTM as it produces its 390 line of motorcycles. It is set to invest another $100 million next month.

That investment, in turn, will allow KTM to resume production next month. However, there is still a long way to go in terms of moving inventory off dealer lots. KTM, however, stated in its own statement that this would begin as a “phased restart” with “the planned full capacity utilization of the four production lines in single-shift operation to be achieved within three months.” That is, small steps, and likely with one assembly line restarting single-shift production.

What is interesting about AKV’s report on the situation, however, is that while KTM shareholders approved the restructuring plan, they did not disclose the other investors besides Bajaj. Indeed, AKV stated: “The name of the financial investor is still unknown.” So who are the other investors? That remains unclear.

Similarly, what will happen to KTM as a whole? Will this restructuring plan result in now co-CEO Stefan Pierer losing control of KTM entirely? Will we see slimmed-down motorcycle launch plans? Will KTM actually withdraw from Moto GP? All of this remains to be seen, as the restructuring plan outside of debt obligations has not been disclosed.

KTM released a video on social media to celebrate the vote of confidence it received from creditors at a hearing last Tuesday (25). The Austrian brand celebrated what it called the end of a “sad chapter” and spoke of moving forward responsibly.

The video, which shows images of the factory and KTM employees, including those in the racing department, is accompanied by the text: “Dear all, today we are closing a sad chapter, but one chapter never tells the whole story. Today, we have been given the chance to continue the KTM story and we must do so responsibly.”

The celebration on social media has gained the support of several riders, who have been keeping quiet about the crisis. Homegrown Brad Binder reacted with the classic ‘Vamos’, while Maverick Viñales bet on the company’s slogan: ‘Ready to Race’.

On Wednesday, Gottfried Neumeister, CEO of the Pierer Mobility group, had already celebrated the approval of KTM’s restructuring plan. With the approval of creditors, the Mattighofen brand avoids bankruptcy, gains time to pay off its debts and can resume production.

“I am grateful and happy today,” said Neumeister. “KTM is back on the track. Our employees have done everything they could over the past three months to ensure that we could keep racing. We closed an important chapter today, but one chapter never tells the whole story,” he continued.

“Now we can continue the great story of KTM. We are doing this for the millions of KTM fans around the world, to whom we are grateful every day. For our factory riders, of whom we are very proud. And for our Austria, which is deeply connected to our hearts. KTM remains one of the largest employers in the industry in Upper Austria,” he concluded.

Neumeister took over as CEO of Pierer Mobility at the end of January, taking over the position held by Stefan Pierer for 33 years.

Mundoquatrorodas