Banks want collateral for KTM loan
According to an Austrian newspaper report, KTM AG is continuing its quest to find an investor or bank to inject capital into the beleaguered brand. CEO Stefan Pierer presented a restructuring plan that offers vendors and creditors 30 percent of what is owed. The creditors have until February to decide if they will accept the plan. To meet the quota, the company needs liquidity from an investor or two; otherwise, it will be broken up and sold to the highest bidder.
KTM’s restructuring administrator, lawyer Peter Vogl, concluded that KTM could not cover the 30 percent on its own. The Austrian motorcycle brand still has enough money to survive until January 19, at least, according to the newspaper.
The conditions
Bank meetings were held in December, where Pierer brass presented a plan to sell off the subsidiaries (GasGas, Husqvarna and KTM). However, the banks were not in favor of this plan. The banks apparently want the same collateral they had in October and request that the subsidiaries only transfer as much money to Pierer Mobility as is necessary for the group’s operation. The banks are also worried that selling off the brands would make them worse off than before.
India and China
Citibank is helping Pierer look for investors, which may come from their Indian and Chinese partners. According to KTM, “strategic and financial investors” are taking part in the process. But they must submit their binding offers by mid-January. KTM’s Indian partner Bajaj Auto Ltd. Bajaj has reportedly offered up to 300 million euros to support the “recovery” of Pierer Mobility AG, in which Bajaj holds around a 37 percent stake.
Pierer’s Chinese partner, CFMoto, is prepared to provide 350 to 700 million euros to restructure Pierer Mobility, and they want the majority ownership. CFMoto distributes and manufactures KTM in China for Pierer Mobility AG and CFMoto in Europe.
The banks want the investors grouped together, according to what the restructuring administrator wrote in his report. However, Pierer disagrees with the plan to get there and some of the finer legal points of the document. The banks want the final say, but Pierer may find a new investor with Citibank to forego this option.
The debts
KTM’s bicycle division has taken numerous losses in the last few years. By October 2024, Pierer New Mobility’s debts to KTM totaled 371 million euros. In addition, 50.1 percent of Italian motorcycle manufacturer MV Agusta was purchased in 2020 and 2022 at the cost of 220 million euros, which are now up for sale again. According to the administrators, what caused KTM’s downfall was its debt rose from 255 million to 1.7 billion euros between 2023 and the end of October 2024.
We will continue to follow the story and hope that KTM can find an investor and begin bailing out of this quagmire, but much damage has already been done.
Source: DerStandard
There is one huge thing people are failing to realize in this situation. The people being approached to bail KTM out will be the same people buying KTM for pennies on the $$$ when they fold. There isn’t to many major players throwing that kind of money around for ultimately a failed motorcycle company
That’s why they aren’t getting bail outs.
Spend 300 mil or 30 mil?
Also do you take the chance buy a 25 KTM dirtbike right now? Being KTM has locked out the customers from repairing there own bikes. They require a dealer specific tool to reset the ecu amongst other things.
Agreed, sketchy situation, but KTM had been here before and they’ve risen to greatness, I believe they will do it again.
This whole thing came as a shock to me as a lover of the KTM brand since testing their 2002 model MX lineup. I am no financial genius What KTM’s bread and butter are the motorcycle that they make which in my opinion are the best in the world with the highest quality bar none .
The big four Japanese manufacturers motorcycles are an insulated product that they sell, all the others bread and butter is something else. Kawasaki makes gigantic ships and pretty much every New York City subway rail car that you see. Honda, I don’t even need to tell you Hondas more recognized for cars that they are for motorcycles which is where they started at. Yamaha has always made musical instruments there some of the best in the world, but what people don’t know is pretty much every Formula 1 team is running an engine that’s has yamaha’s fingerprints on at someplace. Suzuki they started off as a motorcycle actually they started off making looms cotton looms in the 1700s the capitalized on the boom in cotton production, they branched into motorcycles and basically elevated the sport of motocross and then they decided to get it to cars also .
To my knowledge KTM is the largest manufacturer of aluminum radiators for all types of vehicle in all of Europe but obviously that’s not enough to keep the motorcycle brand going. It’s tough to see such a big well-known company going through a financial crisis, but the same thing happens to people on the personal level. Or we could do is tighten the belt stream, have somewhat of a plan and keep stepping forward to day at a time.
I hope something comes through for KTM and that that brand is not flame out that some of the other European brands have in the distant past.
Here’s to hoping,
Michael James
-writer, journalist, poet
Hope is not a plan.
This is a typical story of a company getting too big for their britches, losing track of their core customers, and screwing the dealers that made KTM successful.
There are countless dealers who have either lost their KTM dealership status or given it up after KTM jammed all of their product lines down their throats and KTM decided what bikes a dealer would get each year.
At one time KTM’s were ready to race, that is not so any more.
I am saddened by this fiasco, I have a garage full of KTM’s.
Vendors will get screwed out of 70% of what they had coming to them, employees are waiting on pay. I would bet the executives are not in the same peril as everyone else.
Talk about karma biting you in the back side.