PIERER Mobility looks to investors for KTM financial lifeline

PIERER Mobility AG has issued an Ad hoc statement of insider information about its “far-reaching restructuring and additional liquidity requirement” for KTM AG. This is the third Ad hoc statement the company has issued since the end of August, as it faces serious financial challenges in Q3 an Q4 2024.

In the course of planning for the 2025 financial year, PIERER Mobility AG has to cover additional liquidity requirements at the level of KTM AG. As of June 30, 2024, the KTM AG Group was responsible for more than 95% of PIERER Mobility AG’s revenue.

The executive board is currently working on securing financing for KTM AG, particularly for bridge financing in the three-digit million range. The company says discussions are ongoing with both the core shareholder Pierer Bajaj AG and existing financial creditors. The aim is to agree on a standstill agreement with the financial creditors involved in these discussions as a basis for the financial restructuring.

The negotiations and discussions are currently at an early stage, according to PIERER AG. Therefore, it can’t make any concrete statements about the outcome of the negotiations, the conditions, and the size of additional financing.

In October, PIERER Mobility said registration data for the overall U.S. motorcycle market from January to September 2024 had declined by 6.3%. September was also the weakest month since January 2024, with a decline of 14.6%. Therefore, the company believed a rapid recovery was not possible this year.

Despite a slight reduction in inventories, further destocking is an important objective for the company. However, PIERER Mobility remains fully committed to supporting dealers and suppliers during difficult times. As a result, working capital and the company’s net debt and interest expenses increased.

Far-reaching restructuring necessary at KTM

In addition to securing liquidity, the PIERER’s executive board is working to put KTM back on a stable ground. Against the backdrop of a challenging economic environment, an even more far-reaching operational restructuring is being pushed forward to reduce inventories at both KTM AG and the dealer level to a sustainable level by significantly reducing production volumes. Furthermore, overheads will also be significantly reduced, again.

While we believe KTM will survive the latest financial challenges as CEO Stephan Pierer is a restructuring expert, it is also over-leveraged in current market conditions. Pierer has openly complained about high taxes and rising wages in Austria, so it has moved much of its production to overseas partners in India (Bajaj) and China (CFMoto joint venture).