KTM Restructuring Plan Approved

Updated: February 25, 2025

Since last November KTM AG and two of its subsidiaries, including KTM Components GmbH and KTM F&E GmbH, have been operating under insolvency rules to protect the companies from their creditors. Now a restructuring plan has been approved by creditors but the question of who will provide the required funds remains unanswered for the time being.

On November 29, 2024, KTM entered a process of “self-administration” under Austrian law, which allowed the existing management to retain control but provided 90 days of protection against creditors, during which a plan needed to be agreed with those creditors to navigate the company’s way out of its financial hole. The final deadline was February 25, and that’s when creditors met at the regional court of Ried im Innkreis to vote on the proposed plan.

Under the proposals, creditors will receive a cash quota of 30% of the money owed to them, with the money to be deposited with the restructuring administrator by May 23. That might sound rough but it’s substantially more than they’d get if KTM was broken up and sold. In that situation, the insolvency administrator, Peter Vogl, warned they could only expect 14.9%. Austrian newspaper Der Standard reports that the financing banks that had lent around 1.7 billion euros ($1.8 billion) in largely unsecured loans to KTM had been pushing for a higher quota than the minimum 30% required under the self-administration rules.

Meeting that 30% quota will cost 548 million euros ($575 million) as a one-off payment, and KTM says it needs a total of around 800 million euros ($840 million) in fresh capital to meet that requirement and to get back on its feet.

Initially there will be an injection of 50 million euros ($52.5 million) from existing shareholders to help restart production, which has been temporarily halted to help clear a huge oversupply of bikes that’s accumulated over the last couple of years. In short, KTM cranked up production to meet strong demand during and immediately after the COVID-19 pandemic, but was then left with too much capacity—production vastly outstripping sales the following couple of years, creating a backlog of stock and a shortage of cash. Under KTM’s new plan production will be gradually ramped back up from mid-March 2025 with the aim of returning to full capacity within three months.

In January, Stefan Pierer, who bought KTM back in 1992, stepped down from his role as CEO of Pierer Mobility AG, KTM’s parent group, appointing Gottfried Neumeister in his place but remaining as co-CEO, at least during the transitional period. After the KTM restructuring plan was approved, Neumeister said: “I am grateful and happy today. KTM is back on track. Our employees have done everything over the last three months to ensure that the race can continue. 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.”

During this restricting process, KTM has commissioned Citigroup to seek out new investment, which will be needed within the next three months to find the required 800 million euros. Now the plan has been approved and precise figures of how much investment KTM needs can be established, it’s likely that more clarity will emerge about who those investors might be. Initially, there were reports that 23 potential investors had been identified, but that number is now reported to have been whittled down to seven. KTM’s Indian partner, Bajaj, which is already a substantial shareholder in Pierer Mobility AG, is understood to be prepared to inject 150 million euros. KTM’s Chinese associate CFMoto, which has a joint venture to manufacture KTMs in China and shares much of KTM’s supply and distribution chain, must also be considered a potential investor.

In the last few days a wilder rumor has emerged suggesting that BMW is interested in taking control of KTM, but at the time of writing there’s no firm proof of that beyond reports in Austria citing unnamed “insiders.”

Last week, Pierer Industrie AG, which sits several layers above KTM AG and Pierer Mobility AG in a complex corporate web, also restructured, its plan being agreed to by creditors on February 20. That saw new financing of 248.5 million euros approved, all of which will be repaid in two installments with 69% by the end of 2026 and the remainder by the end of 2027.

Updated: Feb 10, 2025

It was less than a year ago in March 2024 that KTM’s parent company Pierer Mobility AG took majority control of MV Agusta, but the Italian brand is now back in the hands of its former owner as Pierer raises funds to secure KTM’s future.

The sale of MV Agusta has been rumored ever since KTM’s financial plight became clear in November last year, when KTM AG and two of its subsidiaries—all part of the larger Pierer Mobility empire—began insolvency proceedings. As a substantial and recent acquisition, which saw Pierer take 25.1% of MV Agusta in November 2022 and another 25% in 2024 to gain a controlling stake, MV is still relatively easy to disentangle from KTM and capable of operating alone, making it an easy option to sell. Unlike other KTM-adjacent brands like Husqvarna and GasGas, MV’s model range isn’t based around KTM components or designs.

The sale sees Pierer’s stake in MV Agusta bought by Art of Mobility S.A., a company that’s controlled by the Sardarov family and now has full control of the MV group. All that’s known of the financial details at this stage is that Art of Mobility paid a figure that Pierer describes as “an enterprise value in the mid double-digit million range” (in euros). During the short spell with Pierer, MV’s sales grew substantially (2024 represented a 116% improvement over 2023) and Art of Mobility says that the brand’s global sales network will continue as normal following the deal, even expecting it to grow from the current 219 outlets to around 270 before the end of 2025.

“This is a moment of pride for all of us at MV Agusta,” Art of Mobility CEO Timur Sardarov said. “Regaining full control of the company means we are now stronger and more focused than ever on delivering excellence. Over the past two years, the company has significantly strengthened its processes, systems, and workforce. These structural changes are the foundation of the extraordinary results achieved in 2024 and will continue to drive our success in the years to come. I have full confidence in our leadership team, whose vision, combined with the dedication and professionalism of our renewed dealer network, will take MV Agusta to new heights. My commitment, and that of my family, is to be a vital force for the Varese team, the region, and all our partners.”

The announcement came soon after new details of KTM’s debt levels were revealed in hearings at the Regional Court of Ried im Innkreis in Austria, which is overseeing the insolvency. Austrian creditor protection agency AKV Europa reported that creditors have filed claims worth 2.17 billion euros ($2.25 billion) against KTM AG, of which 1.7 billion euros ($1.71 billion) are recognized, the remainder being disputed—largely due to being intercompany claims or claims for damages. On top of that, subsidiary company KTM Components GmbH, also in self-administration, faces claims worth 81 million euros filed, of which 49 million were recognized, and KTM F&E GmbH, the third company in the insolvency, saw claims worth 112 million euros, with 41 million euros recognized. In total, that’s approaching 2.4 billion euros of claims (nearly $2.5 billion).

On the same day Pierer Mobility AG, the parent company that owns KTM, took two notable steps. It released preliminary 2024 financial results and announced that Stefan Pierer, who’s been at the heart of KTM’s renaissance since buying it in 1992, was stepping aside as CEO to be replaced by Gottfried Neumeister—although Pierer will stay on as co-CEO during the KTM restructuring process.

The financial results showed Pierer AG’s revenue was down 29% to around 1.9 billion euros, with motorcycle sales to dealers down 21% to 292,497. Production was reduced even further to 230,000 bikes (a 26% drop compared to 2023) to reduce the number of unsold machines in the company’s global inventory. The 40,000-bike reduction only represents an 18% decline in the level of inventory, though, hinting at how substantial the oversupply has been. Sales to customers are said to be at the same level as 2023, at around 268,000 bikes.

While reducing the level of oversupply is a key part of KTM’s future, the company also needs external investment to ensure it can meet the minimum requirement for an approved restructuring plan, which must ensure that creditors receive a minimum quota of 30% of the money they’re owed. Pierer Mobility says it has received “several offers from investors,” and that based on those offers “KTM AG and its insolvent subsidiaries can be financed at least to the statutory extent of 30 percent.” AKV reports that 23 potential investors are in talks with Citibank, which is tasked with finding the best investor solution.

The next key date is February 25, when there’s a meeting planned to detail KTM’s restructuring plan, so more information on who those potential investors are and how much they’re offering is likely to become clear then.

Updated: Jan 23, 2025

KTM has become one of the big beasts in the motorcycle arena over the last three decades as it grew beyond its off-road roots and spread into almost every niche of riding. In that time, gaining a position as Europe’s biggest bike maker. But that’s all in doubt at the moment as the company is restructuring to fend off bankruptcy.

The company entered its current state, a process called “self-administration” under Austrian law, back in November 2024 after months of concerns as the share price of its parent group, Pierer Mobility AG, took a nosedive during 2023 and 2024. After peaking at over 90 CHF (Swiss francs) per share in 2022 (around $100), Pierer Mobility’s share values dipped below 9 CHF ($10) in November 2024. Pierer Mobility’s structure is complex and encompasses a huge array of brands and companies, but KTM AG is its flagship brand and has seen its fortunes go from boom to bust during the last couple of years.

KTM’s problems are rooted in the COVID-19 pandemic. Like many motorcycle companies, forced factory breaks due to lockdowns combined with issues getting parts from external suppliers led to a reduction in output just as demand from customers grew. Post-pandemic, KTM increased production to meet the pent-up demand and invested heavily both in new models and in expansions, including the purchase of a majority stake in MV Agusta, largely funded by borrowed capital. Those investments and production increases coincided with an unexpected decline in demand, leading to a large inventory of unsold bikes and a lack of liquidity.

In November, three companies in the Pierer Mobility group filed for self-administration, which allows the existing management to remain in place and gives protection from creditors for 90 days, during which time companies need to draw up a restructuring plan that is approved by a majority of those creditors to fend off bankruptcy. Those companies were KTM AG (the main part of KTM) as well as KTM Components GmbH and KTM F&E GmbH (the R&D arm of KTM). Since then, another Pierer company, Avocado GmbH, also part of the KTM group and a supplier of software services to the other parts of KTM, has started insolvency proceedings.

Reports in Austria claim that the reorganization measures being suggested have included reducing production to allow the backlog of bikes to be sold, withdrawing from MotoGP, Moto2, and Moto3, and potentially selling the recently acquired stake in MV Agusta. However, exact details of the plan aren’t likely to become public knowledge until after it has been approved by creditors, and there are already conflicting reports, particularly regarding KTM’s continuation in motorsport. The company is currently contracted to remain in MotoGP until at least 2026, so an early withdrawal would likely trigger penalty clauses. With an engine freeze already in the regulations for 2026, and KTM’s plan for 2025 already budgeted for, there’s a logical argument to remain in the series until the end of the company’s current contract.

KTM parent Pierer Mobility AG has set a date of January 27 for an extraordinary general meeting, with an agenda that includes an injection of fresh capital into the company. The agenda document says: “In particular at the level of KTM AG, which is currently undergoing reorganisation proceedings, a capital injection will be required in the short term to fulfil the quota under the reorganisation plan. Securing debt and equity financing will therefore be a key challenge for Pierer Mobility AG in the coming months in order to provide its main subsidiary, KTM AG, with supporting capital.”

Potential investors that could snap up a larger stake in the company include existing shareholder Bajaj, the Indian bike maker which has a 37% stake in Pierer Mobility and builds KTM models including the 125, 250, and 390 singles. KTM’s Chinese partner, CFMoto, which operates a joint venture factory in China making the KTM 790 parallel twins, is also believed to be ready to buy a stake in the company, and there are reports that a Hong Kong–based investment group, FountainVest, is another potential investor.

Pierer Mobility’s share price has rebounded from its late-2024 lows, hitting the 20 CHF mark in early January. Creditors are expected to agree to the reorganization plan when it’s presented to them, as despite the liquidity problems in recent months the company’s longer-term trend has been one of sustained growth. KTM is pushing ahead with planned new model launches, unveiling the 125 and 390 SMC R in January, and the company emphasizes that dealers are still delivering new bikes, parts, and customer service, with full support for warranties even as the reorganization takes place.

Original Publication: Nov 26, 2024

Rumors have been flying since summer of trouble brewing at KTM. Results reported in late August confirmed Pierer Group generated revenue was down 27 percent in H1 2024. Earnings before interest and taxes (EBIT) was reported at -195 million euro (-$204 million) compared to 97 million ($102 million) the previous year. Today a press release from Pierer Mobility AG has confirmed that the Austrian company is filing an application for “judicial restructuring proceedings with self-administration.” While all brands within the group are affected, KTM AG accounts for 95 percent of Pierer Mobility AG’s revenue.

From the press release:

(November 26, 2024) KTM AG, a wholly owned subsidiary of PIERER Mobility AG, will apply for the initiation of judicial restructuring proceedings with self-administration on November 29, 2024. The financing requirements of KTM AG currently amount to a high three-digit million figure. The management now does not expect to be able to secure the necessary interim financing in time.

The Executive Board of KTM AG therefore decided today to file the application for the initiation of judicial restructuring proceedings with self-administration over the assets of KTM AG and its subsidiaries KTM Components GmbH and KTM F&E GmbH. The proceedings give the opportunity to continue to manage the assets under supervision and to reorganize the KTM Group independently. All other subsidiaries of KTM AG, in particular all sales companies, are not affected.

The aim of the proceedings is to agree a reorganization plan with the creditors within 90 days. Redimensioning the group should not only secure the continued existence of the KTM Group in the long term, but also create the basis for emerging stronger from the proceeding.

A redimensioning of production should lead to a gradual adjustment in excess stock at KTM and its dealers over the next two years. This will result in a reduction in operating performance at the Austrian sites totalling over EUR 1 billion in the years 2025 and 2026.

The restructuring process will result in additional potential losses, for example due to one-off expenses such as necessary write-downs (e.g., for capitalized development costs) and costs for staff reductions as well as the shortfall in fixed costs due to the reduced operating performance and other costs arising from the restructuring process.

“Over the past three decades, we have grown to become Europe’s largest motorcycle manufacturer,” said Stefan Pierer, CEO of KTM AG. “We inspire millions of motorcycle riders around the world with our products. Now we are taking a pit stop for the future. The KTM brand is my life’s work, and I will fight for it.

“Gottfried Neumeister has brought impressive experience and a breath of fresh air and has made a significant contribution to addressing the current situation. I am convinced that together we will get the company back on track for success.”

“The enthusiasm of our employees is our most important competitive advantage,” said Gottfried Neumeister, co-CEO of KTM AG. “Their passion is the reason why KTM is globally synonymous with peak performance. We build our motorcycles reliably and robustly for every race, for every terrain. Now it’s about making the company robust. Robust for the future. So that we can quickly focus again on what we do best: building the coolest motorcycles in the world.”

Recent announcements also confirmed that a halt in production will result in approximately 300 layoffs, in addition to a wave of layoffs earlier this year. The next three months are critical for Pierer Mobility and KTM, and we’ll be watching the news wire closely for updates as the new year proceeds.