The KTM saga continues to twist and turn like an alpine road, so get ready.
There’s a showdown brewing at the Ried Regional Court in Austria. Tuesday morning is D-Day for the future of Austrian motorcycle manufacturer KTM. Tomorrow the creditors are all gathering to vote on a restructuring plan.
The plan presently on the table centred around the Bajaj group and promises the creditors a 30 percent cash rate. The claims add up to around 3 billion euros, with the banks carrying a hefty 1.2 billion euros of that. But Whitebox are looking to break up the company to maximise returns.
The big promise is that the money from this quota should be flowing by the end of May. But here’s the kicker: if the restructuring plan gets the thumbs down, it’s bankruptcy. And that means likely smashing it all up, warned restructuring administrator Dr. Peter Vogl. He’s estimating a smashing rate of only 14.9 percent if it comes to that, which is grim.
Then came a statement from Vogl, who at the end of it all is the man in control of the insolvency case saying before anything else was announced, that he favoured the BMW bid.
Now unless he completely misspoke, that means there is now a third option on the table for the investors.
At 9 a.m. on Tuesday, all the potential investors have to prove to the insolvency administrator that they can actually cough up the €580 million needed for that 30% quota by the end of May. And that’s not all. KTM needs another €200 million to get operations back up and running from March 17, so that is a tight schedule!
Besides Stephan Zöchling, who’s the new chairman of the supervisory board of KTM’s parent company, Pierer Mobility, and the Indian KTM partner, Bajaj, there’s also CF Moto from China and FountainVest from Hong Kong sniffing around. About 150 million euros are supposed to be set up from the ownership sphere to finance getting production restarted at the Mattighofen plant, which is currently shut down.
But the banks are still grumbling that the 30% quota is just too low.
Now, just a day before the hearing. An insider has thrown BMW into the mix, linking them with the Oberbank.
Could BMW Motorrad be about to transfer €780 million to Dr. Peter Vogl?
Industry insiders are saying that BMW, TVS, and Bajaj are thinking about a joint venture to move KTM production to India. But that would need approval from the European Antitrust Court and the Takeover Commission in Austria and Switzerland.
That could take anywhere between nine and twelve months, according to lawyers.
The story goes that BMW apparently wants to shut the production plant I Austria laying off all 4,500 workers in order to save the salary payments and to transfer the costs of € 225 million to the insolvency burden equalization fund, i.e. to Austrian taxpayers!
The present deal means the banks, Bajaj, and Stefan Pierer, KTM’s ex CEO are the ones coming out on top. All the other creditors are losing 70% of their claims, and 4,500 Austrians are losing their jobs.
oe24 tried to get a word from Stephan Zöchling, the chairman of the supervisory board of Pierer Mobility AG, but he’s keeping tight-lipped. He said he’s not allowed to say anything about the current proceedings due to capital market rules and laws. Fair enough, I suppose.
Here’s a strange one: the share value of Pierer Mobility AG has shot up by 40% in the last three months. The insider thinks as I said months ago that there might be some insider trading going on. The theory is that the German, Swiss, and Austrian financial market authorities have begun to look very carefully at the whole case.
Oberbank says they’ll only support projects that strengthen the location, and BMW’s are saying “no comment.” So, that doesn’t help much!
The technical implications of a buyout are huge, too. BMW might have their own ideas about engine designs, chassis setups, and electronics. We could see KTM bikes looking and feeling very different in a few years.
And what about the riders? KTM has a strong presence in MotoGP and off-road racing. A change in ownership could shake things up for the teams, the riders, and even the sponsors.
There’s also talk about BMW wanting to take KTM off the stock exchange. The plan is to expand their product range with KTM off-road motorcycles. Loads of vehicles would then be sold using a common BMW platform, like in the VW Group with the VW Touareg, Audi Q7, and Porsche Cayenne. It’s like they want to absorb KTM.
According to Markus Flasch, the managing director of BMW Motorrad, he wants to use the acquisition of KTM to get himself onto the BMW Group Executive Board.
Word is that he is a strategist who’ll stop at nothing, which may not be great news for the Austrian workforce and the existing structure. He sounds like he’s playing a very ruthless game!
So, to sum it all up, tomorrow is the day. The creditors are meeting to vote on a rescue plan, BMW might be about to swoop in and buy KTM, potentially moving production to India and research to Germany. If that happens, thousands of jobs in Austria could be lost, and Mattighofen could turn into an industrial ruin.
Many will say there needs to be some action from the politicians and the Economic Council to make sure KTM stays in Austria and keeps its employees in work.
The share value is madly volatile, and there might well be some dodgy dealings going on. BMW are keeping schtum.
Right, that’s your lot for today.
Keep your eyes peeled for more updates because as soon as I hear the results of the hearing I will let you know.