Why KTM now quickly needs 600 million euros

The renovation of the insolvent motorcycle manufacturer KTM AG one Stefan Pierer turns out to be more difficult than previously thought. At the audit meeting on Friday, a total of around 2.18 billion euros in claims were registered, of which 506 million euros were disputed by the insolvency administrator Peter Vogl. The disputed claims include intra-group claims and claims for damages from creditors, the examination of which still needs to be in-depth.

However, according to the creditor protectors AKV, Creditreform and KSV 1870, the mountain of debt is likely to increase because further claims are constantly being filed with the court. The KTM employees alone have registered 12.71 million euros.

Production at KTM in Mattighofen is currently at a standstill and is not scheduled to start again until March 17th. The workforce is off duty and on short-time work. When operations start again, there will be significantly fewer employees on board. While there were 2,477 employees when the bankruptcy was declared on November 29th, there are currently only 1,991. There were two waves of layoffs, and at the same time employees left the company voluntarily.

But the further fate of KTM depends on the entry of one or more investors. These investor discussions take place at the owner level, at Pierer Mobility AG. “Without their successful completion, the offered quota of 30 percent cannot be achieved,” says the third report by the restructuring administrator Peter Vogl. “In the opinion of the restructuring administrator, it is still largely likely that an investor will enter the ‘living’ KTM group.” Continuing operations with an investor is “more sensible” than breaking up the company, because there is a higher quota in the restructuring process in bankruptcy.

The investors

The subsidiaries KTM Components GmbH and KTM Forschungs & Entwicklung GmbH, which employ a total of 1,000 people, are also to be restructured. Both are directly dependent on KTM AG. For KTM AG’s targeted 30 percent quota, around 660,000 euros must be raised within two years.

Future investors should shoulder the quota. The restructuring manager is still very confident that KTM can be saved. Because Citibank, which was commissioned by KTM parent Pierer Mobility AG to look for investors, already has 23 potential interested parties on hand.

“These are both strategic investors and financial investors,” the report continues. In addition to these investors, the US asset manager W. with a branch in London has also contacted KTM and Vogl. The company has already made a non-binding offer. Discussions are now scheduled with the potential US investor. However, if KTM’s restructuring plan fails, this investor should plan to take over KTM in the form of buying the company shares.

There is a need for capital

If the quota can be financed, that does not mean that money will flow into the operational KTM AG. The motorcycle manufacturer lacks capital everywhere. “Liquidity was most recently ensured through the reversal of a real estate deal with Pierer Immoreal and through inflows from the sales subsidiaries,” the report continues.

But further capital is needed until the restructuring plan meeting on February 25, 2025, in which the further fate of KTM AG is to be sealed. At least a double-digit million amount.

“Management is working on a solution to cover liquidity needs beyond February 25th,” writes restructuring manager Vogl.

There are three financing options available: firstly, a possible agreement on financing with the banks of the sales subsidiaries, secondly, a capital injection from unnamed third parties and thirdly, at most with money from a potential investor.