Ayup everyone,
And a special thankyou to the people who supported me to make doing the Dakar again possible.
I’m not going to bore you with channel talk today, but I will do an update video on the state of play on the channel and the future soon, and I am having to split this video up into 2 because there is so much going on, and there will be more soon with an unscheduled meeting being announced.
I just wanted to get this out because I really am sick of hearing unsubstantiated rumours and downright lies when it comes to the whole KTM Fiasco.
Flows motorcycles channel has been one of the few voices of reason when it comes to the stories of the Cam failures so I will put a link to his channel below. Go check out what he has to say, it is worthwhile for any of you that don’t already follow him.
And I do blame social media a bit for the over simplification of the whole KTM story. It is not a question of KTM bankrupt good or bad, and many issues surrounding the whole situation we will never see, but as always you can guarantee there wont be any waste material from the cows bottom here.
And remember, this doesn’t just affect KTM. The Yamaha and Aprilia MotoGP team chiefs have already started talking about the knock on effects, even with the other big companies, and the trust factor that is being eroded affects the whole industry.
What January has done is given us another name in the puzzle, and more insight into the financial impacts and what the future options look like from the perspective of shareholders, creditors, riders and dealers alike.
Kronen Zeitung in Austria reported that Stefan Pierer was to resign as KTM Boss. But unfortunately that wasn’t quite true.
He has simply had an internal reschuffle, to manoeuvre himself out of a position of personal responsibility and moved his puppet Gottfried NeuMeister into the firing line.
There is all sorts to follow, but on the 24th of January there was an audit hearing at the regional court in Austria.
The result is that so far, 1,170 creditors have registered claims against KTM AG, and the Creditors Protection Agency has stated that the present figure is in the region of 2.2 billion euros in registered debts. 1.65 billion euros have already been recognised by the restructuring administrators, and it is widely accepted that the remaining 500 million euros will also be recognised.
But it was reported that not one of those claims is from a supplier. That all the claims that have been recognised so far, are banking debts, so many further claims are still expected and the total amount of the debt is still unknown or undisclosed depending on your perspective.
That said, it is already the bigger than any insolvency case ever heard by the Austrian courts.
You can assume that Stefan Pierer will be doing everything possible to stop the release of the big debts until the final point possible too. He will want to avoid more negative impacts on both share prices and possible investment, but I will look at all the figures later as the pieces of the jigsaw come together.
The figure is undoubtedly bigger than anyone thought, but following the audit in court today on the 24th, for me it is hard to see how any investor would sign an agreement knowing not all of the debts had been revealed.
Registered creditors already want 2.3 billion from KTM and that is just the start.
PMG announced it had called for an extraordinary general meeting and that control of the company would be changing.
It also announced that it had secured sufficient investment to cover the statutory minimum of 30% of the debts owed to creditors, which means the restructuring plan could be approved.
Pierer Mobility are continuing with the current restructuring proceedings. But there is dissent, and the unscheduled meeting on the 27th is going to get fiery I think.
The announcement on the investment stated that money will made available to Pierer Mobility, KTM, and any subsidiaries, as it is needed.
The extraordinary general meeting, on January 27th, has a proposal for new convertible bonds worth €900 million to be issued, with just under 17 million shares to be issued to investors. The convertible bonds being offered can also be converted into shares in the company.
This may well mean that Stefan Pierer will be forced to give up control of Pierer Mobility AG, and as a consequence, of KTM AG.
That is most likely the reason he has stepped down as CEO of Pierer Mobility and KTM, initially leaving Gottfried Neumeister as sole CEO. Pierer will stay on as co-CEO until the restructuring proceedings are complete. But there was more to come
Hans Lang & Melinda Busáné-Bellér stated in the official document, that the discussion would be about;
The authorization to issue additional financial instruments,
The announcement that Chairman of the supervisory board Josef Blazicek was resigning
and that Stephan Zöchling was to replace him on the supervisory board of PIERER Mobility AG
They said, and I quote,
“It is intended to convene an extraordinary general assembly at the end of January 2025, at which elections to the Supervisory Board are to be held. In addition, new conditional capital is to be created at this general assembly in order to enable the flexible issue of financial instruments by the executive board.”
“Subject to election at the general assembly, Stephan Zöchling is to become a member of the supervisory board of PIERER Mobility AG. Stephan Zöchling brings with him experience of restructuring in the automotive sector.”
“In order to facilitate the election of Stephan Zöchling to the supervisory board, the current chairman of the supervisory board, Josef Blazicek, today resigned from the supervisory board with effect from the end of the next general assembly.”
I talk more about Zöchling later.
The meeting is to be held on January 27th at PMG headquarters in Munderfing, Austria, just south of its Mattighofen factory.
The full details are in a link in the description
longer text in the EGM invitation on the Pierer Mobility website
But in short, the reason for the extraordinary general meeting is to create new conditional capital. New shares would be issued to allow the board to issue new bonds and those bonds used to secure new loans.
Issuing new shares would mean Stefan Pierer would lose control of not only the Pierer Mobility Group, but also of KTM.
He currently holds a 50.1% share of Pierer Bajaj AG with Bajaj Auto holding the other 49.9%, This company has the controlling 75% share in the Pierer Mobility group, with 25% of the shares in circulation on the open stock exchange.
The new shares would be issued to the parties buying bonds issued by Pierer Mobility, NOT KTM.
Now we already know that one of the parties interested in extending further finance to Pierer Mobility is Bajaj Auto.
So, if Bajaj buys the Pierer Mobility bonds, then exercises its right to acquire shares as a result, control of Pierer Mobility, and by extension, KTM, would pass to Bajaj.
I have always said this has been the most likely outcome since KTM announced it was in financial difficulty, but it is still far from a done deal.
You can hear more in the video linked above but if you haven’t been following, if you do a search on the channel for KTM, you will see all the videos going back to the failed 450 twin project and the MV Agusta acquisition. This is a long and ever evolving story so its worth getting some background.
Interestingly, Bajaj are already taking their first steps into the European market under their own name. They are launching models in Spain and Portugal, and taking control of KTM would speed up the roll out and enable expansion into multiple European markets much faster.
Even in the executive committee leading the restructuring the finger is pointing more and more at Stefan Pierer, as being the one directly responsible for the overstocking of motorcycles that is the biggest cause of KTM’s accumulated debt, which in most cases, at present, is being reported as around €3 billion.
But it isnt that simple, that 3 billion figure is distorted by many things.
In 2022 Pierer himself, was already warning about the sales crisis that was predicted for 2024.
He told the KTM board to be prepared. But then did nothing, so the question remains, as the man in control of everything, why did he continue production at maximum capacity and not take measures to limit the impact?
On the 21st of January in GPone, we got the headline
MotoGP, Light at the end of the tunnel for Pierer Mobility: Are investors now bringing in 900 million?
But we know headlines are at best an oversimplification.
Since the insolvency proceedings began, it has been clear that KTM AG needed big money.
Liabilities of over 3 billion euros were established in december, but so far only the banking debts have been released to the auditors in the Austrian courts.
A figure of 540 million euros was initially talked about as the amount needed before the 90 day insolvency proceedings are completed, but as you will hear that figure is now touted to be around 900 million and still rising.
It legally has to be more than 30% of the total debt.
The 540 million figure was based on liabilities of 1.8 billion, and the new 900 million figure would indicate that the total 3 billion in debts figure I talked about in the previous videos is more accurate.
But this is being offered on the basis that the creditors will be accepting a return of just 30 cents in every euro, which is the absolute minimum legal requirement.
Pierer keeps delaying the release of figures and placating the courts by releasing partial records, but there will come a time soon when it will all come out.
I know people are already flabbergasted by the amount of debt that has been incurred, but I will be totally honest and say I think the actual debts are far more than anyone could imagine, and will only be released at the very last moment.
Regardless of the actual numbers, they have to be able to pay off at least 30 percent of the debts within the 90-day insolvency proceedings to continue the company under the new conditions set up by the administrators.
We touched on those conditions before but they read as follows.
That the total workforce is to be reduced to around 4,000 people, and the purchase of MV Agusta Motor S.p.A. from the Sardarov family is to be reversed, but there is more news on that later.
That means another 750 employees would go, and there are rumours that the production stop from December 13 to the end of February will be extended for at least another month.
A buyer is to be sought for the X-Bow sports car project,
Motorsport activities at the secondary brands Husqvarna and GASGAS are to be cancelled, and the number of factory riders reduced by twelve to 40 riders for the 2025 season.
The bicycle business to be scaled back to a low volume premium sector product.
The US bicycle brand Felt, which was bought three years ago for 12 million Euros, is to be sold, and that is already happening, and the purchase of the bicycle brand R Raymon will also be reversed.
The primary focus will now on the core business of the KTM brand.
Lastly that the search for fresh capital for the parent company Pierer Mobility AG was to be intensified. The US investment bank Citigroup was commissioned to search for additional external investors. and Bajaj Auto in India and CFMOTO in China were the initial target investors.
Present majority shareholder Stefan Pierer and his Co-CEO Gottfried Neumeister have put themselves in control of the restructuring, but a new name has appeared on the scene as I said earlier.
The news is that the existing partners and new investors have now made what is described as considerable financial commitments. The figure is rumoured to be around 900 million euros, and among the potential new investors are private equity funds.
The Pierer managers will then agree a purchase price for the shares with the new private equity investors, but even here it is rumoured that Pierer and Neumeister are trying to get more money from the Private Equity partners than is absolutely necessary so that the restructuring can still be successful, even if someone drops out or the debt happens to be much higher than they are admitting.
Pierer, Neumeister and Zöchling will then present the letters of intent from the new investors’ along with their business plan and financing concept at the creditors’ meeting on February 25.
If the restructuring administrator Peter Vogl and the creditors approve this business plan, the capital of the private equity partners can be called upon and collected after signing the final contracts.
Neumeister who also holds the position of Chief Financial Officer, has a reputation as a fund raiser among creditors and has many friends in the banking community after saving the global Viennese catering company Do & Co from bankruptcy during the Covid crisis.
It is expected that Neumeister will present a sophisticated, credible and pretty watertight business plan to the creditors’ committee.
The unions and politicians in Upper Austria have also demanded that Stefan Pierer contribute some of his own money to save “his life’s work”, but there has been no indication he is interested in doing that, so it may be down to the courts to order some form of contribution, especially as they have been paying the staffs wages for the last few months.
There is also a rumour surrounding the investment company FountainVest from Hong Kong, and they could also play a role in the restructuring. But Zöchling could attract Russian money into the deal too.
It was reported that Stefan Pierer and Gottfried Neumeister were looking forward to the general examination meeting on January 24th with great confidence, but they still didn’t arrive with all the paperwork that had been requested and there are now even more questions being asked about the MV deal, but I will come to that shortly.
After the unscheduled meeting on the 27th of January, we will then have almost a month until the next creditors’ meeting on February 25, 2025, at which, the green light could finally be given for the rescue of the Pierer Group and KTM AG.
Restructuring administrator Peter Vogl said early on that the sustainable restructuring of KTM can only succeed if the extensive motorsport activities are continued as a marketing vehicle under the slogan “Ready to Race”, but this is another area that will require additional funding as all R&D work has been halted, and the administrators have already ordered a halt to the Husky and GasGas teams which did play a distinct roll in the product development. .
The reality is still, that until the investors have turned their declarations of intent into bulletproof contracts, no one can breathe any sighs of relief.
It was on the 11th of January that PMG announced that Stephan Zöchling would join the executive board of PMG, and he has also been appointed to the supervisory board of PMG to replace Friedrich Rothner after resignation as chairmen of the supervisory committee at PMG.
Zöchling, the CEO of Remus exhausts is expected to be appointed chairman of the supervisory board of Pierer Mobility AG at the Extraourdinary General meeting on January 27.
A long time associate of Stefan Pierer, Zöchling has been brought in for his negotiation skills, but he has been involved in many big deals with Asian companies and has established contacts in Russia too, so he may also be a conduit for more financing.
At the moment, much is still speculation based on the financial documents issued at the courts by Pierer Mobility AG. But the extraordinary general meeting should mean we see the next developments soon.
At the beginning of the month it was Business live in Austria that weighed in, announcing on the 8th of January that PMG needed 900 million euros to bail out KTM, but that there was an offer on the table.
However, as I have explained, this would mean a dilution in share prices. And that isnt a small dilution. It would mean all the existing investors would be hit heavily, and with the Extraordinary General Meeting happening on January the 27th, sparks are going to fly.
Outside of Bajaj, the rumour mill was talking about 2 other Chinese investors who have bids on the table, and although at this point, no names have been officially identified, you can expect FountainVest to be one of them.
The only one we truly Knew about was the Bajaj group rescue plan, but that has now changed, and there is dissent in the ranks. There is a new alternative plan but that news has just landed and I will discuss it shortly.
The Bajaj offer is the one we have seen documentation for and it is obviously the preferred option from a PMG perspective at the moment.
It is now reported that over 1800 people have lost their jobs across the various Pierer Mobility Groups subsidiaries so far and now PMG have released their final accounts for 2024, we can see Revenue and sales were both down,
Revenue was 30% down at €1.9 billion while motorcycle sales figures were down and distorted. The figure of 292,497 motorcycles sold is already 21% down on last year, but the figure is actually the sales invoiced to dealerships. And we know from last year, that they extended credit to dealers who couldn’t sell their existing stock. So the actual sales figures are way off here.
Nowhere near 292,000 bikes have actually been sold to customers.
They say operating costs will account for another 300 million but they are vague about what period that figure will cover them till. And the decline in sales and operating losses mean that Pierer Mobility expects to post a loss before interest and taxes of around €300 million.
Debt is also expected to increase, and the the free cash flow or income after deducting operating costs and capital expenditure is expected to be a “high negative triple-digit million figure”, which translates as somewhere between €600 million and €1 billion. Which fits with the €900 million euro figure talked about as the new investment.
But what this doesn’t account for at all is the depreciation of stock and with nearly 230,000 unsold motorcycles weighing on KTM’s debt load, depreciation could be massive, especially if the majority of those bikes are LC8C engined models.
You still see the constant marketing drivel about all the wonderful new models coming for 2025 too, even though we all know the factory is at a standstill.
Then we got the headline that KTM were Under Investigation by the Austrian Financial Market Authority about the sale of its MV Agusta Shares,
The actions surrounding KTM’s financial crises have just been shady, putting it kindly. KTM execs even told journalists there was no credence to YouTube videos claiming the brand was in financial trouble, knowing full well that it was all true.
But there wasn’t any official talk of anything illegal at that point, although you know in the video linked above that I did last year I was not shy about saying what I thought was happening.
Now they are under investigation.
According to a report by the Austrian newspaper who’s name I cant pronounce at all, Oberosterreichische Nachrichten, the Financial Market Authority in Austria has launched an investigation into KTM’s operations.
Specifically, the probe intends to determine whether PMG complied with disclosure regulations.
Public companies, like PMG, must publish insider information immediately so that it is available to all market participants simultaneously and based on a report by the Austrian Press Agency, between May and November, that did not happen.
As of now, it’s unclear whether there has been any criminal act, but investigations are underway.
You see, KTM has a 50.1 percent majority stake in MV Agusta, but before the administrators stepped in there was already speculation surrounding whether PMG would sell its controlling stake in MV.
It acquired control of MV after more financial jiggery pokery from PMG and recently, the regional court in Upper Austria heard that the administrator would proceed with the sale.
Selling off shares should have been obvious with the company $3 billion in debt, but instead of pursuing that sale prior to administration, Pierer continued with denials about the sale.
The rumour is that the other major shareholder in MV Agusta, Timur Sardarov, might be buying back his shares to regain control, but that is yet to be confirmed.
Anyway, back to the meetings and we hear from Business Live in Austria that there were “difficulties coming to any agreement” and that “the shareholders and creditor banks were both being intractable, standing at opposite ends of the platform screaming at each other”.
Pierer is adamant that 30% is the maximum available but the banks are sticking to a request of 70% of the debt be covered.
Then we hear there is more dissent. Another group of the shareholders led by US hedge fund managers Whitebox are not happy with the 30% return on the original investment offered at present and have put a seperate plan to the administrators that they say will give a better return than the 30% offered by the Pierer/Bajaj rescue plan.
They say as you can see in the slides that they believe this is just a way for Pierer to mop up shares on the cheap, and that their offer would give significantly better returns to existing shareholders.
So there is an internal battle now. Not just between Pierer and the banks, but also between Pierer and the other KTM shareholders.
This is the very latest news and is still unfolding, but is going to make the meeting on the 27th even more explosive.
This does all start to sound more and more like the web of lies surrounding the MV Agusta deal that sparked my investigations at the start.
Pierer, despite “STEPPING BACK AS CEO” was also quoted as saying that the reduction in inventory is in full swing and he emphasised that customer demand was still strong, but I guess that is just Stefan Pierer up to his usual tricks.
This is the man who has constantly contradicted previous statements whenever a new announcement is made, and despite saying he was the man to lead KTM out of this mess has now stepped down.
All his words should be taken with a VERY big pinch of salt.
The rumours about Lewis Hamilton taking control of the MotoGP team will not happen, because the aim as far as Pierer is concerned is for whoever takes control to inject enough capital to save the entire company, not just its racing division.
It has even been reported that Mercedes have been in talks, and that revealed something else. That since 2023 Stefan Pierer has been included in all of Mercedes’ highest-level meetings.
Indeed in August 2024, Pierer signed the sale of 50.1% of Leoni, a German multinational automotive wiring manufacturer and subsidiary of Mercedes, to the Chinese Luxshare group, and this is the deal that secured him a seat on the board of directors at Mercedes, but I digress.
But you see i’m sure that this is a complex corporate web.
KTM are at a critical moment in their history. The insolvency proceedings, led by administrator Peter Vogl, are now at a decisive phase.
The January 24 audit meeting gave us more actual numbers but they still aren’t complete, and with the unscheduled meeting on the 27th of January and the final vote on the rescue plan on February 25th, it is the creditors who will determine the fate of KTM.
Then we hear about some oddities among the financial issues.
During 2024, one of the things PMG did was purchase a foundry in Austria, only to close it 4 months later, and yes I said close it, not sold it.
Is that a sound business move for a company that knew it was in financial trouble?
We also have confirmation that during 2024, despite the trouble at KTM, Pierer invested an undisclosed amount in Rosenbaur, an Austrian firefighting company. Then he goes begging to the Austrian government to pay the wages of the staff at KTM.
There is something almost delusionary about some of these decisions.
I have watched this story unfold since the start of the MV takeover and the death of the 450 twin project I covered so long ago now.
I have always been wary of the impact the Pierer Mobility Group was having on the motorcycle industry and I cannot help but look at the effect it has on the industry overall, and if you know me, you know what this industry means to me.
The professional motorcycle media has been covering this in a way that is disingenuous at least and downright deceptive at times. Not helped by Pierer’s constant contradictions and the evidence piling up against him admittedly.
But yes, maybe it is easier for me to criticise because I am an independent channel.
I don’t celebrate any of this, I just try my best to work out the real story behind the headlines and announcements, to figure out what the future holds for KTM and the other brands involved in this utter mess.
There is more about the racing teams but I will have to cover that in a separate video, but it isn’t great news for the Hard Enduro World Championship, and there is much more.
The meeting Monday will now be massively important too, and it looks like there will be a showdown between the banks and the warring groups of investors.
I hope the war is over soon.
For now, I’m signing off today.
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