Well yesterday we got the confirmation that Bajaj had SAVED KTM.
The reality is they had taken a loan out for 566 million euros at the start of the week and by sending some via the Pierer Mobility Group and some direct to KTM they have fulfilled the rescue package terms and conditions.
Everyone was quick to jump on the headlines of course, but there is still much to digest, as there was news earlier in the week about other changes within Stefan Pierer’s empire, or ex empire depending how you see it.
What this money covers is purely and simply the cash that was needed to pay off the 30% agreed amount to creditors.
It does nothing to alter the fact the factory in Austria is still shut, but no one is talking about that one.
It does mean that Bajaj Autos is very much in control of KTM now, and there has been a lot of shouting about Stefan Pierer stepping down from the board completely.
The official statement which I will put on screen in its entirety states that,
Stefan Pierer steps down from the Executive Board of PIERER Mobility AG in June 2025 after the conclusion of the restructuring proceedings.
The Supervisory Board appoints Verena Schneglberger-Grossmann, who has been with the group since November 2015, as new member of the Executive Board and Chief Legal Officer of PIERER Mobility AG supporting the CEO Gottfried Neumeister.
One of the other things no one seems to be looking at is that this money is NOT an investment as such, it is another loan, and it comes with strings attached.
Yes, yet another loan on top of the 200 million euro’s in loans to get the factory running before they had to close it again.
And what was that all about?
Why borrow some money to start up the factory then shut it down again just before borrowing more to bail KTM out again?
Incidentally, despite Rajiv Bajaj’s own personal fortune being readily available, the money is being loaned in part by Citibank, who were one of the insolvency boards representatives.
So the reality is, in 6 months since last November, Citibank, Steffan Zochtling and the insolvency council have completely failed to find any genuine new investment, and have, at the final hurdle used yet more loans to keep the company afloat.
Lets think about that for a moment, was it not the excessive loans and increased interest rates that started all of this debacle?
Yes there had been an overproduction of bikes, but the interest on the massive loans that PMG and KTM had been running on was unsustainable then, and I cannot see it as anything other than unsustainable now.
However, for a year at least, things are to continue, sort of, because that money doesn’t actually cover getting the factory in Austria up and running again.
That is a different story.
But let’s look purely at the financials here.
In 2023, KTM had record sales and record profits, the earnings before interest and taxes figure was 160 million euros. So in the very best circumstances, which is stretching it a bit, if KTM equal those record profits this year and all the money goes to pay the Bajaj loans, they will still be over 600 million euro’s short at the end of the year.
Does that sound sustainable to you?
As to the strings attached, the deal is rumoured to stipulate that if the full loan amount is not paid within a year then the loan will be converted into shares. But we know Pierer had a deal like that with Steffan Zochtling once too.
The full amount we are talking about is around 200 million since January to start the factory, and another 550 million this week, so 750 million euros in total, to be paid within a year.
I say now, that that is impossible for them.
It had been previously announced by KTM that any new investor was unlikely to see any profit for ten years, but at that rate with the increased interest on the loans, I think it will take more like half a century.
If you consider the factory is still shut, the only thing this has changed since the November insolvency announcement is that the creditors got scammed by Stefan Pierer and co, the suppliers arent happy, small investors got cut out of the equation, and the power balance within the Pierer Empire has changed a little.
It is still the same people involved.
One thing to consider, or for some maybe worry about, is the fact that Verena Schneglberger-Grossman has now been confirmed on the board.
She is the legal eagle that oversaw the MV Agusta acquisition and was subsequently placed in the controlling position on MV’s board by Pierer. She is one of HIS most trusted advisors, or some would say accomplices i’m sure.
Anyway, to the news people aren’t talking about.
At the beginning of the week we heard about a major restructuring that involves KTM Racing.
Despite all Pierer’s previous promises, corporate changes were made within KTM AG, to create better conditions for potential investors for the MotoGP project.
In addition to appointing Lucas Lauda the son of legendary Formula 1 driver Niki Lauda as Assistant Manager to support new CEO Gottfried Neumeister, KTM has confirmed the transfer of its factory team’s MotoGP grid slots to a Swiss-based parent company.
My first reaction was how is this remotely legal in the middle of all the changes caused by the insolvency proceedings? Neumeister stated they are a Swiss based PARENT company, but as you will hear later, Pit Bierer states clearly they are still a part of KTM AG, so which is it?
According to KTM, this reorganization aims to simplify investment opportunities and attract partners focused specifically on the MotoGP side of operations.
The move is also said to be a part of a broader restructuring to separate the road racing and off-road divisions under the KTM AG umbrella.
At this point I wondered, why a Swiss holding company? Banking secrecy perhaps?
Anyway.
KTM’s Motorsport Director Pit Beirer stated
“We made an internal change – it was about shifting things. It is a purely formal thing. We have made corporate law precautions and carried out a legal separation between the activities in the field of road racing and off-road racing. All this is still under the umbrella of KTM AG and characterised by the stabilisation of KTM AG! A potential investor in the MotoGP project will hardly accept 65 off-road works riders. Here there is clear interest through MotoGP and Liberty.”
So, I can understand the comment re 65 off-road works riders, but there are 2 important points here.
The first is that the there will be a total split between KTM Racing’s MotoGP team and KTM Racing’s off road endeavours, and the second, that both will still be held under the KTM banner with KTM AG as the parent company.
His view of the company does contradict what Neumeister said too, so which is it?
Neumeister called them a “Parent company”, whereas what Beirer’s description would effectively make them a subsidiary or a holding company.
As there has only been one Swiss company announced, that means that the MotoGP team has effectively been separated off completely, but the Off road race teams haven’t.
How that will pan out is anyone’s guess, but it does seem like the whole thing has been driven by deals with the Liberty Media team and DORNA.
So now, contrary to Stefan Pierer’s previous statements, separate investment in the MotoGP concern is exactly what KTM are looking for. They just wont see any of the money.
And investors usually want shares.
Where have the shares to create this investment opportunity come from within KTM AG all of a sudden?
Is this another back door to syphon more money out of KTM without the oversight and control of the Austrian banks and other legal oversight committees?
Who are the members of the board at this new holding company I wonder?
The background to this part of the story is that it could significantly increase the value of the MotoGP deal that is happening right now.
The upcoming acquisition of MotoGP by Liberty Media has, according to reports, been followed by four companies approaching existing Promoter Dorna with an interest in an investment in the KTM MotoGP project, or the KTM grid slots.
The reality is, even after this announcement and the furore about how Bajaj have saved KTM, the future is far from clear and certainly not rosy.
Manufacturing of the small capacity road bikes has continued throughout in India, and it is these bikes and the Indian market that will now play a key role in the future of KTM.
Rumours have it that the dirt bikes will continue to be made in Austria with a very slimmed down workforce, but so far no money has been set aside to do that.
It is also already being discussed that CF Moto may be the ones building the bigger displacement bikes in the future.
I have heard that Bajaj have themselves been developing an all new 700cc parallel twin that is not derived from the LC8C, but then another source stated it was based on the 790 engine, so rumours abound.
We will start to see how this all rolls out next year, but until the Austrian factory is started up again to build the dirt bikes, and CF Moto are confirmed as manufacturers for the 1290 and 1390, most of the available bikes in dealers are likely to be the bikes based around the 390 engine and built in India.
So we actually know very little more than we did a week ago really.
There is still no start up date for the factory and as far as I am aware there have been no deliveries of the much needed parts to start up production.
For riders sake, I hope things begin to settle down and parts supply is improved soon.
There was a rumour that Bajaj will look at the LC8C cam issue as well, but I have no idea how they could work out a way to settle that now after all the denials of the past.
Time will tell as they say.
For now, some will feel a sigh of relief, others gasps of disbelief I am sure.
I am glad KTM in some form are still with us, but I do worry about the sustainability of a company that has such a massive debt again before they even start production.
Let me know your thoughts in the comments.
Will KTM Austria survive?
Will the race teams from the dirt bike world be separated off like the MotoGP team has been?
And how will factory support look in both MotoGP and the various Factory Racing teams in the Dirt Bike World?
Remember, the mother ship is still in debt with shareholders to satisfy.
What will KTM look like in the future?
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