English
Italiano
After the continuous bad news throughout 2024, KTM managers have been left in a shambles. Since March, business partners, shareholders, employees and creditors have been confronted with profit warnings and other unpleasant news at regular intervals. Things have been getting really tough since October, when Pierer Mobility AG had to admit that there was an urgent financial need in the three-digit million range by the end of the year. Optimists hoped that it would be an amount of around 100 million euros, but a little later there was talk of a "high three-digit million amount". So suddenly liabilities of around 800 million had to be feared.
Then the Pierer Group even had to file for insolvency proceedings under its own responsibilty for KTM AG. On November 29, after an initial audit at noon, the Austrian Credit Protection Association even reported liabilities of up to 3 billion, and in the evening the amount was revised to around 1.8 billion.
Since then, the negative news has not stopped. Because the Pierer Group converted Pierer Mobility into a financial holding company and reduced the number of board members to two (Stefan Pierer and Gottfried Neumeister), the share price fell several times in November by double-digit percentages. But the fact is: There are still four board members at the parent company KTM AG who are doing everything in their power to save Europe's largest motorcycle manufacturer from ruin by the crucial date (February 25, 2025).
On December 17, it was reported that the ailing Austrian two-wheeler manufacturer Pierer Mobility was looking for new investors. In order to carry out the process efficiently in a "structured, transparent way and in the interests of all stakeholders", the US bank Citigroup was commissioned to oversee the investment process, Pierer Mobility announced last Tuesday evening.
Pierer Mobility is currently in talks with existing partners such as Bajaj Auto in India as well as with new strategic investors and financial investors, the statement said. The aim of this investment process is to find investors who will subscribe to a necessary cash capital increase or financial instruments of the company - in the next few weeks.
Whether this succeeds will depend on how credible and targeted the package of measures and the restructuring measures of Pierer Mobility AG are perceived to be by the creditors and by the insolvency administrator Peter Vogl at the regional court in Ried in Innkreis. The cash of a potential investor is to be used to strengthen the Pierer Mobility Group, especially KTM AG, according to the announcement. To complete the structured investor process, it will be necessary to convene a general meeting at the "due time" to pass the relevant resolutions, it continues. The fact is: all of a company's assets lose 15 to 20 percent of their value on the day insolvency proceedings are opened.
Pierer Mobility is struggling with high inventory levels (up to 130,000 unsold motorcycles) and low demand in all important markets. Especially in the USA, where sales of 1 billion US dollars will still be generated in 2023 and where a new US headquarters was opened on March 28, 2023 - with construction costs of USD 53 million.
It has now been heard that a proportion of the unsold motorcycles were built according to the Euro5 standard, which can no longer be put into circulation in the EU from January 1, 2026. They can therefore only be sold outside the EU. Or they will be put into circulation in December 2024 and then sold as used vehicles with significant discounts.
The insolvency proceedings were opened on November 29, 2024 not only for the parent company KTM AG (in Mattighofen), but also for its two subsidiaries KTM Components GmbH (in Munderfing) and KTM Forschungs- und Entwicklungs-GmbH (which is Research & Development) in Mattighofen. One can imagine that this KTM fiasco will also affect other projects and companies that depend on the financial pot from Mattighofen. Not only are countless top teams in many different motorsport disciplines and championships worried about their personnel and equipment for 2025, but subsidiaries are also running out of money. A week ago, it was leaked that several employees of the KTM Factory Racing department in Munderfing were still waiting for their December salary.
It was then admitted that the FIM Hard Enduro World Championship, founded by KTM, would also have to go into liquidation because the riders were no longer being paid. In a letter to the participants a few days ago, the WESS managers wrote: "The recent decision by KTM to withdraw its support for the Hard Enduro World Championship has significant implications." Whether this really means the end of the Hard Enduro World Championship remains to be seen. The current team, led by Winfried Kerschhaggl and Ricardo Mitterer, is determined to ensure the continuation of the series and is actively working to organize the promotion of the championship for the next season in a different setting.
On December 18, a crisis meeting was reported. The meeting took place between the KTM works councils, the PRO-GE and GPA unions and the Chamber of Labor (AK). The Pierer Group has not confirmed the figures, but the Chamber of Labor considers them plausible. Accordingly, not 500, but 550 more employees are to be laid off - a total of 800 instead of 750. But these 50 layoffs were not part of the restructuring plan. AK Upper Austria President Andreas Stangl spoke of a loss of trust after the promised salary payments before Christmas were not made. No wages could be paid to KTM employees in November and December, including the Christmas bonus, which counts as the 14th salary.
Less and less can be drawn from the drying up KTM pot. A few days ago, insolvency proceedings were opened against the "Vöcklabrucker Metallgießerei" (a subsidiary of KTM Components GmbH). On December 13, 2024, bankruptcy proceedings were started at the Wels Regional Court over the assets of Vöcklabrucker Metallgießerei GmbH, A-4840 Vöcklabruck, Vöcklastrasse 20, at its own request. Object of the company: Production of cast parts from all light metals and their alloys, non-ferrous and heavy metals as well as mold and model making. Sole shareholder: KTM Components GmbH. Affected employees: 134 (including 103 workers, 23 employees, 8 apprentices). Affected creditors: 79. It is still unclear which assets are available. The liabilities amount to around 3.5 million euros. The company, which was only taken over by KTM Components GmbH on September 1, 2024, produced cast parts and models for industry. According to its own insolvency application, sales were split 50 percent between KTM AG and 50 percent between third-party customers. The current bankruptcy application had to be filed within a very short time because the wages of the 103 workers due on December 15, 2024 could no longer be paid. The first creditors' meeting and examination hearing will take place on March 13, 2025 at the Wels Regional Court.
The cornerstones of the restructuring concept presented by Pierer and Neumeister include a dramatic reduction in the bicycle business (there are around 40,000 to 50,000 unsold bicycles in the warehouses), a separation of the 50.1 percent share of MV Agusta Motor S.p.A., which was acquired in March 2024. But the revival of the traditional luxury brand MV Agusta is costing an immense amount of money, and only 1,852 units were sold in 2023.
When it was rumored in the summer that the Pierer Group wanted to sell the GASGAS brand again, the board described this as "nonsense". But GASGAS will no longer play a role in top-level sport in the future, and Husqvarna (acquired by BMW in 2012) is to concentrate entirely on off-road disciplines. The insolvency administrator reported on the findings to date as part of the report meeting that took place. He is currently primarily busy reviewing the financial situation, assessing the appropriateness of the restructuring plan offer and processing challenges, liability and other claims, and several experts have already been commissioned.
The insolvency debtor is the central company of the KTM Group. There are more than 60 subsidiaries in total. According to the administrator's report, cooperation with the debtor and all bodies of the debtor company is going well and all necessary information is being made available immediately. The liquidity planning for the continuation of the company submitted by KTM AG has been and will be reviewed by experts as part of the insolvency proceedings. According to current estimates, there is sufficient liquidity in the company until the time of the audit meeting. The liquidity for all 3 insolvent companies (KTM AG, KTM Forschungs & Entwicklungs GmbH and KTM Components GmbH) is to be ensured via KTM AG.
Externally commissioned experts (market analysts) assume that the motorcycle market is generally growing, but the high production costs in Austria are affecting competitiveness. Market demand has already declined in 2023. The restructuring administrator expressly emphasized yesterday that the wages and salaries of employees can be paid for December. The financial plan submitted by the debtor is continuously monitored and adjusted by the restructuring administrator and experts consulted and can currently be adhered to.
The planned reorganization measures:
• The sale of the shares in PIERER IMMOREAL GmbH was published in the edict file and offered for sale.
• Payments to subsidiaries of the KTM Group that are not essential to operations have been stopped. As a result, several subsequent insolvencies of other KTM companies are now expected. The other two KTM companies, which are already insolvent, are essential for the continued operation of the KTM Group and will be financially supported by KTM AG by continuing to purchase the services and goods from them.
• In order to reduce costs, the company plans to withdraw from MotoGP Moto3/Moto2.
• In order to reduce production costs, the possibility of (partial) relocation of production is being examined.
• Production is to be halted until after the restructuring plan has been passed.
• Stock is being sold off at dealers.
The KTM managers assured yesterday, however, that participation in the GP classes Moto3, Moto2 and MotoGP will continue as planned. Whether this intention can be reconciled with the plans of the creditors (including 180 banks) will become clear in the next two months. We keep hearing that a new sponsor (Red Bull as the main sponsor remains a secure partner with 10 to 15 million euros) and possibly even an investor is being sought to continue racing under the motto "Ready to Race".
Creditors can still submit their claims to the insolvency court via the AKV until the end of the registration period on January 16, 2025. The next hearing will take place on January 24, 2025. At this hearing, the respective audit statements of the restructuring administrator and the debtor will be submitted for the claims made by the creditors.
Experts assume that around 540 million euros will be necessary to meet the creditors' target of 30 percent. It is hoped and expected that Stefan Pierer and the strategic 48 percent partner Bajaj Auto from India will raise this amount.
Stefan Pierer was unequivocally asked by politicians in Upper Austria to contribute significant amounts of his own capital if he wanted to save his life's work. Stefan Pierer always planned to invest his own money to save KTM. That's why shares in PIERER IMMOREAL GmbH are now being offered for sale.
The situation at KTM has escalated dramatically. This is also illustrated by the fact that production was shut down on December 13th, a week earlier than planned - until March 1st. By 2026 or 2027 at the latest, the reduced workforce is expected to produce 250,000 motorcycles per year again. In 2023, the figure was 381,555 units.
The extent to which and the financial means with which KTM AG can continue to operate motorsport will become clear by February 25th at the latest.
