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Since the opening of the insolvency proceedings on their own responsibility on November 29, 2024, it has been clear that KTM AG has an urgent financial need of at least 540 million euros due to liabilities of 1.8 billion euros in order to be able to pay off 30 percent of the debts through the 90-day insolvency proceedings and continue the company under new conditions. With around 750 fewer employees, after a production stop lasting two and a half months (from December 13 to the end of February), a merciless restructuring program and austerity measures in all areas.
In addition to reducing the workforce to around 4,000, the restructuring program includes a painful reversal of the purchase of MV Agusta Motor S.p.A. to Rashid Sardarov, a buyer is being sought for the X-Bow sports car project, numerous motorsport activities have been canceled at the secondary brands Husqvarna and especially GASGAS, and the number of factory riders has been reduced by twelve to 40 for 2025. The bicycle business is being rigorously re-dimensioned and scaled back to a manageable premium segment. The US bicycle brand Felt, which was bought three years ago for 12 million Euros, is being sold to a consortium led by Florian Bourget, and the 100% purchase of the bicycle brand R Raymon has also been reversed.
The primary focus is now once again on concentrating on the core business of the KTM brand. And last but not least, the search for fresh capital for the financial holding company Pierer Mobility AG (which supplies the subsidiaries with urgently needed money) was intensified in the autumn with the shareholders and partners Bajaj Auto in India and CFMOTO in China. The US investment bank Citigroup was commissioned to search for additional external investors.
It is now clear: the tireless efforts of CEO and majority owner Stefan Pierer and his new Co-CEO Gottfried Neumeister have borne fruit despite the considerable time pressure.
Those responsible for the Pierer Group have severely restricted communications during the last two months because only rarely could positive messages be conveyed and the share price continued to sink into the abyss at the end of 2024.
In the meantime, an extraordinary general meeting of Pierer Mobility, based in Wels, has been called for January 27, 2025 at 10 a.m. A new supervisory board will be elected there, and the course will be set for a financially secure future for the biggest European motorcycle manufacturer, which sold 381,555 units in 2023 and is expected to sell at least 250,000 motorcycles in 2025.
In recent days, reliable sources from the Pierer empire have reported that the existing partners and new investors have now made financial commitments of considerable amounts. The figure is rumoured to be around 900 million euros.
Among the potential new investors are private equity funds that want to acquire shares in KTM and make them available to the motorcycle factory so that necessary investments and payments can be made in the company.
In the financial world, private equity (over-the-counter equity) is a form of equity capital that cannot be traded on the markets.
The Pierer managers will then agree a purchase price for the shares with the new private equity investors; they usually pay a risk premium, which can then be invested in the ailing company.
It can be assumed that Pierer and Neumeister are trying to get more money from the Private Equity partners than is absolutely necessary so that the restructuring can still be successful if someone drops out.
With the investors' letters of intent ("term sheets"), Pierer and Neumeister will then present their business plan and financing concept at the decisive creditors' meeting on February 25. And if the restructuring administrator Peter Vogl and the creditors approve this business plan, the capital of the private equity partners can be called upon and collected after signing the final contracts.
Chief Financial Officer (CFO) Neumeister has an excellent reputation as a fund raiser among creditors and especially among most of the 180 lending banks because he has presented trustworthy concepts and created an excellent atmosphere for discussions with creditors when he saved the global Viennese catering company Do & Co from bankruptcy during the Covid crisis. It is therefore expected that Neumeister will present a sophisticated, credible and pretty watertight business plan to the creditors' committee.
The unions and politicians in Upper Austria have also demanded that Stefan Pierer contribute some of his own money to save his life's work. The investment company FountainVest from Hong Kong could also play a role in the restructuring.
That is why the men at the helm Stefan Pierer and Gottfried Neumeister are now looking forward to the general examination meeting on January 24th with great confidence.
An important date for all customers, partners, dealers, factory riders, team members, employees and fans of KTM, Husqvarna and GASGAS will definitely be the next creditors' meeting on February 25, 2025, at which, following the latest positive developments, the green light could finally be given for the continued future existence of the Pierer Group and KTM AG.
For months, politicians and business people in Austria have considered KTM, with its many suppliers and subsidiaries in the Upper Austria region, to be systemically important and "too big to fail".
While KTM won the Dakar Rally for the 23rd time in 26 years in January, and the two MotoGP teams (Red Bull KTM Factory with Binder and Acosta, Red Bull KTM Tech3 with Viñales and Bastianini) will be presented on January 30, and the first two MotoGP tests are just around the corner and the SX season in the USA has already begun, the rescue of the red-white-red motorcycle manufacturer is now looming.
This confidence is now also spreading among investors, as the share price of Pierer Mobility AG has risen by around 50 percent since January 1st.
Dorna CEO Carmelo Ezpeleta has never made a secret of the fact that he firmly expects the two MotoGP teams from Red Bull KTM to continue to exist.
The agreed supply of the eight Moto3 teams with 16 GP riders who will enter the World Championship with KTM RC4 motorcycles should soon no longer stand in the way.
Restructuring administrator Peter Vogl accepted early on that the sustainable restructuring of KTM can only succeed if the extensive motorsport activities are continued as a marketing vehicle under the slogan "Ready to Race".
Whether Stefan Pierer will remain majority owner and CEO during the planned restructuring phase will also depend on how quickly KTM generates respectable profits again. In the current structure, Pierer Industrie AG currently holds 50.1% of Pierer Bajaj AG as an intermediate holding company, while Bajaj Auto holds 49.9%. Pierer Bajaj AG holds 74% of Pierer Mobility AG, the rest of the shares are in free flow - that is 26%.
The private equity investors mentioned usually stay on board the companies with their risk capital for 5 to 8 years before they sell their shares again (ideally at a profit) - sometimes to the original owner.
As Stefan Pierer certainly has a substantial know-how for the motorcycle business and now has a congenial partner at his side in CFO Neumeister, the 68-year-old Austrian will probably continue to be a determining factor as KTM helmsman in the foreseeable future.
And if KTM regains market shares thanks to improved global economic conditions, thereby getting into calmer waters and into the profit zone, Stefan Pierer could one day buy back company shares again.
Even if the current positive news has brought about a significant relaxation among those involved, premature euphoria is out of place for the time being.
Only when the investors have turned their declarations of intent into bulletproof contracts can all those affected breathe a deep sigh of relief.
