Today we had the final hearing at the Austrian Courts to deal with the KTM Insolvency and consequent restructuring plan.
First off, some good news! The creditors have finally accepted the restructuring plan for KTM AG! Shares in Pierer Mobility have recently shot up by nearly 17% and according to Reuters there was a complete block on trading in both PMG and KTM shares on the stock exchange.
But we got no explanation why.
The final agreement means that creditors will get a 30% cash quota of their claims, but now this will be paid in one chunk rather than gradually as had originally been proposed.
That means KTM AG needs to deposit €548 million in the administrators account before May 23, 2025.
Then it gets complicated and a bit dubious.
Because until today it had been stated bery clearly that all the money needed to be in place by this hearing, and it isn’t.
Today they recorded that they need another €100 million by March 31, 2025 to begin production again, but that only adds up to a total of 150 million euros, and previously, it was clearly stated by Pierer, Zochtling and Peter Vogl the administrator, that 200 million euros per month was the amount needed to keep the production running.
And with production having been stopped since december, I would expect the first month to include an increase in costs not a decrease. Unless something has changed regarding the cost of the employees?
So the million dollar question has to be, “where’s all this money coming from?”.
Well, Bajaj, who already own nearly half of KTM (49.9% to be precise), have deposited the initial 50 million with the administrators. That is a loan to cover immediate operational costs, which although some may say is a lifesaver, is yet more debt for a company that is weighed down with debt already.
Bajaj’s have recently invested money to save the Pierer Mobility Group and increased their stake in the Pierer-Bajaj group, so they will now be the majority shareholders by my calculations.
Basically, Pierers mate from India has pulled him out of the fire.
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But there is another “secret investor” involved. Apparently, they have been working with Bajaj to save KTM, but there is no details about who they are.
The creditors’ vote took place today and claims totaling €2 billion were recognised out of a total of €2.25 billion that were presented.
Today they said that to get production back up and running from mid-March 2025, they need that extra €150 million to keep things afloat, with about 2000 employees returning to work by the end of May.
They are planning to get all four production lines running at full capacity on a single-shift operation within three months. So that means the other 2,500 staff will be doing what for the next 3 months exactly?
US hedge fund Whitebox Advisors, who hold a fair chunk of KTM’s promissory notes, wanted lenders to reject the plan and were pushing their own proposal, seeking a share in any future profits from KTM’s turnaround.
Their plan was, however, given the thumbs down by the insolvency administrator, Peter Vogl.
What todays hearing didn’t clear up was where Citigroup, who have been hired by PMG to help find the additional €550 million needed to finance the cash quota and further production, are getting the money from.
The administrators will have been given promisory notes for them to have agreed, but no details are yet being published.
So is it really the end of the saga? Somehow, I don’t think so. At best, it looks to me like PMG have done what they do best, scammed the smaller shareholders and pushed the can down the road.
More debt is not going to help KTM one bit as far as I am concerned. It will just exacerbate the problems.
But what does all mean for the average owner or buyer?
Well, it means KTM is likely to survive, at least for now, and someone will continue churning out those orange machines.
The 390 Adventure, the Duke, and all the rest of the small capacity bikes will be being made by Bajaj in India, and the rest is still uncertain.
If the promisory notes are not turned into cold hard cash by the end of May, then there may still be trouble ahead.
There is more news involving KTM, Husqvarna, and GasGas, but that is a different story and I will cover it soon.
For now, all we can do is wait and hope that the additional €550 million comes in.
Will Bajaj increase their stake further?
Will the “secret investor” be revealed?
And how will KTM adapt to this new financial reality?
Only time will tell.
For now, it seems like KTM has been given a lifeline.
They’ve got a tough road ahead, and still have a lot of money to find, but with the support of Bajaj, their creditors, and hopefully a bit of good luck, they might just pull through.
Right then, that’s all for today. Let me know what you think in the comments below. Do you think KTM will bounce back stronger than ever? Or are they still in deep trouble?
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