KTM plans to remain in Austria

KTM plans to stay in Austria amidst rumours of a foreign takeover, but it remains tight-lipped about the identity of its saving investor. 

The embattled Austrian firm needs to find at least EUR 600 million to pay back 30 per cent of the estimated EUR 2.25 billion debt it owes to creditors. Negotiations with potential investors are still ongoing but are reportedly in a “concrete status”. 

Rumours about the identity of the investor/s have included CFMOTO, Bajaj Auto, a Hong Kong investment firm, and even Munich-based BMW Group, but creditors were reassured by the insolvency administrator, Dr. Peter Vogl, that KTM wants to remain in Austria. 

AKV Europa, the Austrian creditor protection firm at the centre of the KTM insolvency case, told bikesales that it believes the investor will be “a European company”.

“The investor is still kept secret, but the administrator says he is involved in the negotiations and is positive KTM will be able to raise this money,” said Dr. Cornelia Wesenauer, a spokesperson for AKV. 

“I cannot say anything about rumours, but one thing they have told me for sure is that it’s supposed to be a European company. That’s what we know.” 

Dr. Wesenauer also said she believes that the investor will be a company “already involved” in the motorcycle industry, and that it must be big enough to pay the required funds.

Additionally, Dr. Wesenauer said that creditors were told that KTM plans to keep production in Austria, and that it was “promised” that a “working place” would be kept in Austria. 

This was a key point for creditors as they voted on KTM’s proposed restructuring plan. Many of the creditors are Austrian suppliers who would benefit most from KTM continuing to operate in Austria. For some, it is likely essential to their survival. 

But while the creditors are still in the dark about the identity of the investor, they received enough reassurance to vote in favour of KTM’s plan.

Of course, it is still unclear exactly what this means for KTM going forward.

Indian giant Bajaj Auto is already a 49.9 per cent shareholder in KTM parent Pierer Mobility Group and has reportedly contributed EUR 50 million to help KTM restart production. KTM announced last week that production had restarted with a single shift following a three-month pause. 

Austrian tabloid news website OE24 reported that BMW was planning to buy KTM in a three-way deal with Bajaj and BMW’s own India-based partner, TVS. The report suggested that BMW wanted to move operations to Munich and production to India, effectively making all of KTM’s Austrian staff redundant.

This would be a huge blow for the Upper Austria region, and seemingly at odds with the reassurances by KTM that it would remain active in Austria. 

Dr. Wesenauer also pointed out that a potential BMW bid was only mentioned by the media and never in the insolvency proceeding itself. 

bikesales reached out to BMW Group but did not receive a response.  

CFMOTO, which has a joint venture with KTM, has also been reported as wanting a majority stake in KTM, but this is also at odds with AKV’s belief that the investor will be a European company. 

Hong Kong investment firm FountainVest has also been mentioned in media reports, while many believe Bajaj Auto could also increase its stake, effectively taking majority from Stefan Pierer. But these reports also remain unconfirmed.

Another potential wildcard is Stephan Zöchling, who was elected to the supervisory board of Pierer Mobility AG in January. Zöchling is the co-owner and CEO of Remus, an Austrian exhaust system manufacturer, and is reportedly interested in investing in KTM, but the extent of any possible investment is unknown.

Zöchling's arrival is part of a bigger game of musical chairs at KTM, which also saw majority owner Stefan Pierer step down as CEO of KTM AG and hand the reins over to Co-CEO, Gottfried Neumeister. This all comes after the Pierer Mobility AG executive board was reduced to just two members last year. Pierer remains CEO of Pierer Mobility AG, but it is possible that he will lose his majority ownership with any impending investment.

Additionally, bikesales asked Volkswagen Group (parent of Ducati) if there was any interest in buying a stake in KTM, but was told emphatically by Pietro Zollino, Head of Corporate Communications at VW, that “there is no interest from Volkswagen Group in buying a stake or investing in KTM AG (or its parent companies)”. 

Dr. Wesenauer believes that investment in KTM will likely involve a shareholding in Pierer Mobility Group. This means that the identity of the investor will become known in time, but that a lot of negotiation and paperwork will be needed to get the deal done. It is likely that the investor will become known before May 23, the deadline for KTM's 30 per cent cash quota payment. 

Meanwhile, AKV also shed some light on the reported takeover by key creditor Whitebox Advisors LLC. The American firm was believed to have proposed its own restructure plan in a bid to get creditors on board and ultimately take over KTM. 

According to reports, Whitebox was unhappy with KTM’s response to the proposal and accused the Austrian firm of denying creditors a more favourable option.

But AKV says that Whitebox’s proposed plan was at odds with Austrian law and could never have been considered. 

KTM filed for a legal restructuring under Austrian insolvency law in December after it became apparent its debt was insurmountable. The company was then given three months to propose a restructuring plan to creditors via an insolvency administrator.

Creditors voted in favour of KTM’s restructure plan at a hearing held at the Regional Court in Reid, Austria, on February 25. As per the plan, KTM must pay a 30 per cent cash quota of its debt to creditors by May 23 in order for the plan to be fulfilled. If it is fulfilled, creditors keep their business with KTM, while KTM is free from paying the remaining 70 per cent of its debt.