Level of KTM debt revealed as creditors file claims
By Ben Purvis
KTM AG along with two subsidiaries - KTM Components GmbH and KTM F&E GmbH (which translates to 'KTM R&D') - entered insolvency proceedings in Austria last November amid talk of spectacular debt and huge levels of unsold stock.
As of late January we started to be able to add some real numbers to the story thanks to preliminary 2024 results from parent company Pierer Mobility AG and information from hearings in the Austrian Regional Court of Ried im Innkreis that's overseeing the insolvency.
Under Austrian law, the three KTM companies entered 'self-administration' allowing the existing management to remain in control and giving 90 days to come up with a restructuring plan that a majority of creditors agree to. That plan must ensure that at least 30% of the debt can be repaid within two years. Since then, an American creditor has suggested that the 30% be repaid in the shorter term, and another Pierer-owned company, Avocado GmbH which supplies software to KTM as the backbone of is business, has also entered insolvency proceedings.
The start of KTM's problems appear to stem from the Covid pandemic in 2020-21, which sparked a combination of strong demand for bikes that coincided with a shortage of supply thanks to lockdowns, factory closures and delays in getting components.
The brand invested heavily to meet that stored-up demand post-pandemic, as well as developing new models and taking on responsibility of distributing MV and CFMoto in Europe and the USA. As the motorcycle market stabilised after the pandemic-driven boom, KTM's production outstripped sales, leaving a large number of unsold bikes and cashflow problem that eventually led to the bankruptcy protection filing.
On January 24, a hearing at the Regional Court of Ried im Innkreis revealed the scale of the creditor claims against KTM. According to the independent creditors' association, AKV Europa, creditors filed claims of € 2.185bn against KTM AG, € 81m against KTM Components GmbH, and € 112m against KTM F&E GmbH. A proportion of the claims are disputed - notably those for damages and intercompany claims - but from the € 2.38bn in total claims against the three companies (and growing), around € 1.75bn are 'recognised.'
On the same day, Pierer Mobility AG released preliminary figures for the 2024 financial year and confirmed that Stefan Pierer, who bought KTM in 1992 and oversaw its rapid growth since then, has handed over his CEO role at Pierer Mobility to Gottfried Neumeister. Pierer will stay on as Co-CEO during the restructuring process, but his future beyond that is unclear.
The preliminary 2024 figures show that Pierer Mobility reduction motorcycle production by 26% in 2024 to 230,000 bikes - with KTM accounting the vast majority of those machines - and sales to dealers were 292,497, down 21% on 2023's number. Meanwhile, retail sales were on a par with 2023 at 268,000 bikes.
The result is that the company has reduced its global inventories by around 40,000 bikes, but that's only an 18% decline - suggesting the figure was as high as 220,000 unsold machines and is still around 180,000.
The final 2024 financial report isn't expected until the latter part of April 2025, after the restructuring process at KTM is complete. The deadline for the restructuring to be agreed by creditors is the end of February 2025.
That restructuring will also involve new investment from outside, with Pierer commissioning Citibank to find investment. Reports suggest 23 potential investors are involved, and Pierer Mobility says it has 'received several offers' that will provide the resources needed to finance 'at least' the required 30% minimum quota owed to creditors under the self-administration rules.
Details of those offers haven't been made public but there's widespread speculation that Indian manufacture Bajaj - a substantial Pierer shareholder and KTM manufacturing partner - will increase its stake in the company, and that CFMOTO, KTM's partner in China, might also put in a significant amount of money.
