We've been told since we were kids that three is a magic number. Will it work out that way for KTM, though?
The report from its restructuring administrator, Alpenländischer Kreditorenverband Europa (AKV), contains a number of important details.
While we've primarily been talking about KTM AG (the motorcycle manufacturer), they're one of three arms of the KTM Group that are currently going through insolvency proceedings in Austria. The other two are the R&D arm, KTM Forschungs & Entwicklungs GmbH, and the components arm, KTM Components GmbH.
Of these three arms, KTM AG is the largest, with the greatest amount of liabilities and the biggest number of employees who are affected by the company's good and bad fortunes. Together, the three groups have liabilities estimated to be around 2.9 billion Euros, owed to around 2,500 creditors (which AKV is still urging to come forward to join the case).
Of those 2.9 billion Euros in liabilities, KTM AG is responsible for approximately 2.7 billion of them. That should give you some idea of the scale involved.
By contrast, KTM Forschungs & Entwicklungs GmbH has outstanding liabilities of about 105 million Euros, and KTM Components lists around 80 million Euros in liabilities of its own. The two latter arms have fewer than half the number of employees that KTM AG does, as well.
Now that you have a better idea of the numbers KTM is dealing with, here's where potential investors come in.
Banks Better Have Their Money
Under the terms of the current proposed restructuring plan, all three KTM Group companies would continue. Furthermore, they would pay the creditors who are part of the insolvency 30 percent of the debt owed, to be completed within two years of their acceptance of this restructuring plan. AKV is currently reviewing the plan. Creditors have until January 16, 2025 to register as part of the proceedings, and a finalized restructuring plan is due on February 25, 2025.
Because Pierer Mobility AG (part of the umbrella company Pierer Industrie AG) naturally wants KTM to continue, it's been working with Citibank to help find investors who are eager to step in and shoulder some of this debt burden. Binding offers, says Austrian business publication Der Standard, must be submitted no later than the middle of January 2025.
While seven-time F1 champ Lewis Hamilton is reportedly in talks with the KTM MotoGP team, three interested companies have so far come forward as potential investors on the KTM AG side. Two of them are names you already know if you've been paying attention to KTM for any length of time.
If you guessed that Bajaj Auto Limited, which already owns part of both Pierer Mobility and KTM AG, is in the mix, you'd be correct. Unsurprisingly, KTM's other manufacturing partner, CFMoto, has also expressed investor-level interest in Pierer Mobility in this scenario. It's also worth mentioning here that since 2023, KTM has been CFMoto's exclusive distributor in Europe. That lends additional weight to why it's in CFMoto's best interest for KTM to right the ship.
How much money are we talking? On Bajaj's side, it's reportedly ready to invest up to 300 million Euros in Pierer Mobility AG's recovery efforts. As for CFMoto, the possible investment amount ranges anywhere between 350 and 700 million Euros, again to support restructuring efforts of Pierer Mobility AG (not KTM; instead, one level higher).
Who's the third interested investor? It's a Hong Kong-based private equity firm called Fountainvest, but exact details of its interest so far haven't been disclosed. Other companies Fountainvest has invested in include Amer Sports, which owns more familiar brands you might know that include Arc'teryx, Wilson (yes, the tennis brand), Peak Performance, and Louisville Slugger. Another one is CFB Group, which operates Dairy Queen and Papa John's Pizza in China.
Not So Fast?
While it seems at this time that both the banks and Pierer Mobility see it as being in the best interests for all concerned that KTM continue, there's reportedly some disagreement about the best way to get there.
You'll note that it was Pierer that sought out those potential investors, not the banks. The banks, for their part, want final approval over any decisions that are made during the restructuring process. And Pierer seemingly wants to do what Pierer wants to do. I mean ... isn't that how Pierer found itself in this situation in the first place, though?
Not just the overproduction of bikes as demand went down, but also a reported 371 million Euro debt emanating from its bicycle division alone, which was tied into KTM AG. The MV Agusta tie-up also apparently cost it a further 220 million Euros. What's worse is that, to quote Der Standard's Renate Graber, "[these] investments made over the last two years [were] mostly financed on credit."
That's to Say Nothing of the Workers
Not to sound like a broken record here, but the more you learn about this situation, the more difficult it is to not sympathize with KTM's employees, who last got paid in mid-November 2024, for October's wages. Although the government's insolvency fund is reportedly stepping up to pay their missing wages, they won't get them until mid-January 2025. Again, I ask, how would you like to not get paid for two months?
You wouldn't. Period. And neither would I.
While KTM's creditors can line up to file claims with AKV Europa, its workers have no such option. With that in mind, it's no great surprise that a poster reportedly appeared at KTM HQ in Mattighofen over the Christmas holidays. It reportedly read, "Merry Christmas Stefan. Wishes from your employees who made you a billionaire and who you didn't even pay their wages or Christmas bonuses."
For what it's worth, none of us at RideApart want to see KTM fail. But it's equally clear that things simply cannot continue as they have been, for too many reasons to list.
Here's hoping that 2025 sees as good an outcome as there can be to this entire situation, for the good of everyone involved. Especially the workers, and the riders.
Source: AKV Europa
