What we know about KTM’s restructuring deal
Multiple news outlets are reporting that KTM’s creditors have approved a restructuring plan that will write off 70 percent of what they’re owed to bail out the beleaguered Austrian company from its bankruptcy woes. According to reports, KTM has just three months to secure $840 million USD to finance its turnaround.
Citigroup has been leading the effort to find investors (rumored to be BMW as one potential partner) and Pierer Mobility, KTM’s parent company, has reported interest from several other potential investors in the past month.
At this week’s recent restructuring plan meeting, creditors accepted the restructuring plan submitted by KTM AG. Pierer Mobility says the plan provides creditors with a cash quota of 30% of their claims as a one-off payment (cash quota). To fulfill the quota of 30% cash, KTM AG must deposit 548 million euros with the restructuring administrator by May 23, 2025, at the latest. The court will then confirm the restructuring plan at the beginning of June 2025 and the restructuring proceedings of KTM AG will end once it becomes legally binding.
To enable production to be ramped up again gradually from mid-March 2025, KTM AG will receive 50 million euro from Bajaj. With the approval of the reorganization plan, this amount will be transferred to KTM AG to cover the costs of the phased resumption of production in March 2025. The planned full capacity utilization of the four production lines in single-shift operation is to be achieved within three months.
Founder Stefan Pierer stepped down as CEO after struggling to navigate the headwinds after Covid, which led to excessive inventories. Pierer and KTM have become a symbol of Austria’s struggling economy with rising energy and labor costs.
Bloomberg’s report notes that if creditors had voted against the company’s plan, KTM would have ended up in liquidation, with creditors recovering even less of what they were owed.
“We have achieved a significant step toward saving the company,” restructuring administrator Peter Vogl said. He told another news outlet that one large creditor and some smaller ones opposed the plan, which had the backing of about 90% of total claims.
KTM must secure 100 million euros of funding by the end of March to resume production, on top of the 50 million euros Bajaj has provided to cover operating costs.
