Creditors greenlight two-wheeler maker KTM AG debt restructuring plan

The restructuring plan for embattled European two-wheeler maker KTM AG, a wholly owned subsidiary of Pierer Mobility AG and backed by India’s Bajaj Auto, has been approved by creditors, clearing the way for production to ramp up by March 2025. Under the plan, creditors will receive a 30 per cent cash payout on their claims, signalling a significant haircut. 

 

Bajaj Auto holds a 49.9 per cent stake in its Austrian partner Pierer Bajaj AG (PBAG) through its wholly owned subsidiary, Bajaj Auto International Holdings BV (BAIHBV), in the Netherlands. With KTM set to resume production, the brand’s share in Bajaj Auto’s exports is expected to rise. 

 

KTM AG filed for court-restructuring proceedings with self-administration on November 29, 2024, aiming to reach an agreement with creditors within 90 days. At a meeting on Tuesday, creditors approved the proposal, which requires KTM AG to pay the 30 per cent cash quota to the restructuring administrator by May 23 this year. 

 

Pierer Mobility CEO Gottfried Neumeister welcomed the development in a press statement, saying, “I am grateful and happy today. KTM is back on track.” He praised employees for their efforts over the past three months and said: “We have closed an important chapter today. But a single chapter never tells the whole story. Now we can continue the great story of KTM.”

 

“We do it for the millions of KTM fans worldwide, to whom we are grateful every day. For our racers, of whom we are damn proud. And for our Austrian location, to which we are deeply attached in our hearts. KTM remains one of the top employers in the Upper Austrian industry,” Neumeister said. 

 

To finance the restructuring and resume production, KTM AG requires fresh capital of approximately ^800 million. Citigroup Global Markets Europe AG has been appointed to oversee the investment process, ensuring transparency and efficiency for all stakeholders. 

 

KTM AG plans to gradually ramp up production from mid-March 2025, supported by a ^50 million cash injection from an extended group of shareholders. The company aims to fully utilise its four production lines in a single-shift operation within three months. 

 

Amid its debt restructuring efforts, KTM had been in talks with banks and investors to secure funding. 

 

A senior Bajaj Auto executive said in January that the financial difficulties at KTM, where Stefan Pierer recently stepped down as CEO, have not impacted domestic sales in India. 

 

The KTM bikes sold in India are manufactured at Bajaj’s Chakan plant and distributed through the latter’s network, so there has been no impact on domestic sales, said Rakesh Sharma, executive director at Bajaj Auto. “However, exports have been hit, as KTM supplies multiple global markets. It was already slowing down and is currently on hold.”

 

Shipments fell from 6,500 units per month in Q3FY25 to 3,500 units, reducing KTM’s share of Bajaj Auto’s exports from 6 per cent to 3 per cent.   

 

In Q3FY25, Bajaj Auto saw a broad-based recovery in exports, which returned to over 500,000 units after nine quarters. Export revenues rose 16 per cent year-on-year to ₹4,500 crore in the third quarter. The company expects export growth to remain strong, exceeding 20 per cent in the near term, with Latin American markets driving momentum. 

THE ROAD AHEAD 

  *  30% cash quota to be paid by May 23

  *  €800 million fresh capital requirement

  *  Production will be ramped up again starting mid-March

  *  KTM’s share in Bajaj Auto’s exports is expected to rise, from 3% in Q3FY25