Creditors Approve KTM’s Restructuring Plan
KTM, the renowned Austrian motorcycle manufacturer, has successfully secured the approval of its restructuring plan from its creditors. The approval came after a critical vote at the regional court in Ried im Innkreis, Upper Austria, on Tuesday. The company, which was facing significant financial challenges, presented claims totaling 2.25 billion euros. Out of these, debts worth two billion euros were recognized, underscoring the magnitude of the financial issues KTM was grappling with. The restructuring plan, which was essential for the company’s survival, provided for a cash quote of 30%, amounting to around 600 million euros, to be paid by the end of May. Additionally, 150 million euros are required to restart and gradually ramp up production at KTM’s main plant in Mattighofen from mid-March. This crucial funding will ensure the company’s operations and the employment of around 2000 employees until the end of May.
The Court Hearing and Creditors’ Vote
The hearing, which began at 9:00 AM, was initially scheduled to last three hours due to the overwhelming number of 3847 claims filed by creditors. The courtroom was packed with around 100 people, including KTM CEO Gottfried Neumeister and co-CEO Stefan Pierer, who were present to support the restructuring plan. KTM AG owes approximately 180 banks a sum of 1.3 billion euros. Prior to the vote, banks had called for a higher cash ratio, creating uncertainty about the plan’s acceptance. However, shortly before 2:00 PM, it was confirmed that the creditors had approved the restructuring plan. According to a statement from Pierer Mobility AG, the plan ensures that creditors will receive a cash quota of 30% of their claims in a one-off payment. KTM AG must deposit 548 million euros with the restructuring administrator by 23 May 2025 to fulfill this quota. The court will formally confirm the restructuring plan at the beginning of June 2025, marking the end of the restructuring proceedings.
Financial Settlement and Production Plans
The approval of the restructuring plan not only secures the financial settlement but also guarantees the plans for increased production in mid-March. A sum of 50 million euros will be made available from the expanded group of shareholders to cover the costs for the month of March. This initial funding was deposited in a trust account of the restructuring administrator on Monday. The further plan of Pierer Mobility AG is to achieve full capacity on the four production lines in single-shift operation within three months. This ramp-up is crucial for the company’s recovery and for maintaining the trust of its stakeholders. The afternoon also saw two creditors’ votes at the Ried im Innkreis Regional Court regarding the subsidiaries KTM Components GmbH and KTM Forschungs- & Entwicklungs GmbH. These votes, involving smaller sums, are expected to be approved, further solidifying the company’s financial stability.
Investor Support and Continuation Costs
The Alpine Creditors Association (AKV) emphasized that the judicial confirmation of the restructuring proceedings is contingent upon the continuation costs of 150 million euros being deposited by 23 May 2025. This includes the 50 million euros already deposited for March. To meet the total requirement of around 750 million euros (600 million for the cash quota and 150 million for continuation), KTM will need additional support. Bajaj Auto, which holds a 49.9% stake in KTM, had already injected 50 million euros into the company in the form of a loan. However, the name of the primary financing investor remains unknown. Pierer Mobility AG has stated that fresh capital of 800 million euros is required to finance the cash quota and further production. Citigroup Global Markets Europe AG has been commissioned to support the investment process, ensuring it is structured and transparent.
Future Prospects and Stakeholder Confidence
The approval of the restructuring plan is a significant milestone for KTM, providing a lifeline to a company that has been a cornerstone of Austrian manufacturing and motorsports. The commitment from creditors and the support from shareholders, including Bajaj Auto, indicate a strong belief in KTM’s potential for a successful turnaround. The ramp-up of production and the gradual resumption of operations at the Mattighofen plant are critical steps in this process. By achieving full capacity on its production lines, KTM can not only meet its financial obligations but also regain its competitive edge in the motorcycle market. The transparency and structured approach to the investment process, led by Citigroup Global Markets Europe AG, further bolster stakeholder confidence. As the company moves forward, the focus will be on executing the restructuring plan effectively and ensuring sustained growth and profitability.
Conclusion
The approval of KTM’s restructuring plan by its creditors is a testament to the resilience and determination of the company’s leadership and its stakeholders. With the financial settlement secured and the production ramp-up underway, KTM is on a path to recovery. The continued support from Bajaj Auto and the structured investment process, overseen by Citigroup Global Markets Europe AG, provide a solid foundation for the company’s future. As KTM works to fulfill its obligations and regain its market position, the approval of the restructuring plan marks a crucial step towards a brighter and more stable future for this iconic Austrian brand.
