Last week (02-Jan-25), Pierer Mobility AG (KTM) announced that Stephan Zöchling would be appointed a supervisory board member. At the same time, Josef Blazicek, the current chairman of the supervisory board, resigned. Both events will apply from the next general meeting.
Pierer Mobility said that Stephan Zöchling is experienced in automotive restructuring. No further details were shared.
With Pierer Mobility's ongoing financial troubles, a substantial cash injection is needed to tide it through. The company is reeling under debt that we had initially estimated at EUR 1.5bn. However, proceedings have started in the bankruptcy court in Austria, and it is becoming clear that the debt may be significantly more. A recent Rideapart story puts the debt at nearly EUR 2.9bn, owed to more than 2,500 creditors.
From the RideApart story:
Two thousand five hundred creditors and counting are details that worry us even more.
KTM needs investors, and the media is already discussing some names that are likely to invest. Pierer Mobility has appointed Citigroup Global Markets Europe AG to reorganize its ownership structure to prepare for the upcoming financial restructuring.
The potential investors are likely to be India-based Bajaj Auto, which already owns 49.9% of Pierer Bajaj AG, the holding company that holds 74.9% of Pierer Mobility AG. Bajaj Auto is the world’s most profitable two-wheeler manufacturer and has close ties with KTM. It develops and manufactures all KTM/Husqvarna road bikes with sub-400cc single-cylinder engines. Rajiv Bajaj is the vice-chairman of the Pierer Mobility supervisory board, and Bajaj Auto has at least one more director on the board.
The problem is that any investment by Bajaj Auto hands over the controlling stake to the Indian company. That may be a bitter pill for Stefan Pierer, widely credited as the man who resurrected KTM.
However, the German publication Der Standard, in a report from 27th December, claimed that Bajaj is willing to provide up to EUR 300m to restructure KTM.
An investment and acquisition of Pierer Mobility may not make immediate sense for Bajaj Auto, as we had explained in our analysis. This is what we wrote:
The other potential investor may be China-based CF Moto, and we find them more plausible. Unlike Bajaj Auto’s already near-50% stake, CF Moto has a very small stake (<1%) in Pierer Mobility. So, any investment would not give CF Moto management control. In the same report, Der Standard claims that CF Moto can put in EUR 350m - 700m to restructure KTM.
Der Standard also adds the Chinese investment group Fountainvest to the list of suitors. The group has interests in media, entertainment, sports, and telecom and owns brands like tennis goods manufacturer Wilson.
The Pierer Mobility board and the banks must agree and accept one or more offers. The publication estimates that KTM will have money by mid-January, so action must be taken before that.
Impact
While we may have a resolution to the immediate financial restructuring soon, the KTM problems will have a long-lasting impact on all the participants, Pierer Mobility’s extended universe, and the European motorcycle industry. Some effects that are already visible:
- KTM has to find a new owner for MV Agusta. This may likely be a Chinese manufacturer (CF Moto?) as the Chinese manufacturers have invested in large lifestyle motorcycles, and MV Agusta as a brand still holds sway.
- Bajaj and CF Moto would be impacted and may need to step in as investors to minimize the impact. Bajaj manufactures some of KTM’s largest-selling models (everything below 400cc) and distributes KTM motorcycles in India and Indonesia. Meanwhile, CF Moto makes the 790 and 890 range while KTM distributes KTM and Zeeho in Europe.
- Also impacted would be KTM-owned suspension manufacturer WP and also design studio KISKA which not only works for KTM, CF Moto and Bajaj but also a score of other automotive manufacturers including E2W start-ups like Zeno.
