As per a statement from Pierer Mobility AG yesterday evening, KTM creditors have accepted the restructuring plan submitted by KTM AG. The plan provides creditors with a cash quota of 30% of their claims as a one-off payment.
To fulfill the quota of 30%, KTM AG must deposit an amount of EUR 548m with the restructuring administrator by May 23, 2025. The court will then confirm the restructuring plan at the beginning of June 2025, and the restructuring proceedings of KTM AG will end once they become legally binding.
KTM creditors have more than EUR 2.23bn in claims (excluding employee claims); a little more than EUR 2.08bn of these have been recognized. Further, more than EUR 22m claims from employees have been admitted.
It is unclear if the remaining debt will be carried forward in the books. A EUR 548m payout indicates a 74% haircut, which is still a better deal than the 85% haircut that the media indicated in case KTM was to be dismantled and sold.
Notably, most Austrian jobs would be saved. Another EUR 150m investment would be made to restart production at Mattighofen, with production set to resume in March 2025.
Where is the money coming from?
Not surprisingly, Bajaj Auto is putting in some money. Based on the details available, the Indian manufacturer will invest EUR 50m to restart production. However, this may be the initial tranche only as Bajaj had recently made allowances to invest EUR 150m in its Dutch subsidiary. This money is likely to be all earmarked for KTM restructuring.
With the liquidity injection for the resumption of manufacturing, KTM plans to fully utilize the four production lines in single-shift operation within three months.
The Bajaj cash injection is immediate and only a small part of the overall funding KTM needs to raise. The restructuring plan calls for the remaining sum of money to be raised from another investor(s). It seems the other investor is not yet finalized, as KTM is still in talks. However, the talks have to be very close to finalisation, or else the restructuring plan would fall through.
In another release, Pierer Mobility says it needs to raise around EUR 800m. The group has been letting go of its acquisitions that drained cash in the first place. Last month, KTM sold MV Agusta back to Art of Mobility S.A., the family-run Italian enterprise from which it had acquired MV Agusta.
Impact
Saving jobs is a good job. However, resuming complete capacity utilization plays against KTM's inventory situation of carrying about a year's sales worth of motorcycles as stock. That number cannot have been depleted significantly in the last three months.
The second investor is still being finalized. Media rumors put BMW as a name, but with CF Moto and Bajaj both partners of KTM, the Germans are unlikely to be interested unless the Indians and Chinese are given an exit. BMW also has an Indian partner in TVS, who happens to be Bajaj's arch-rival.
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