Motorcycle manufacturer KTM files for insolvency proceedings
Published: Friday, Nov 29th 2024, 15:30
Updated At: Saturday, Nov 30th 2024, 00:58
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The Austrian company Pierer Mobility has filed for insolvency proceedings for its subsidiary KTM at the competent regional court in Ried im Innkreis. This was stated by a company spokesperson on Friday at the request of the news agency AWP. The motorcycle manufacturer, which is in severe financial difficulties, is thus taking refuge in creditor protection.
KTM is applying to the court for debtor-in-possession restructuring proceedings. The spokeswoman was unable to say how long it would take for the regional court to approve the application. According to the Austrian creditor protection organization Creditreform, the proceedings concern KTM AG and its subsidiaries KTM Components GmbH and KTM F&E GmbH.
According to Creditreform, uncovered receivables amount to 2.3 billion euros. This is offset by assets of 352 million euros. Around 2,500 creditors and 3,500 employees are affected by the insolvency, said Creditreform Managing Director Gerhard Weinhofer. If the creditors agree to the restructuring, they could expect to receive 30 percent of their claims.
The company, which belongs to the Pierer Group, is one of the largest motorcycle manufacturers in Europe and is struggling with high stock levels and low demand.
Huge hole in the till
Last Tuesday, Pierer made public the shortage of funds and the intention to restructure: "As things stand at present, KTM AG's financing requirements amount to a high three-digit million sum. The management now does not assume that it will be possible to secure the necessary interim financing in time."
The court proceedings provide the opportunity to continue to manage the assets under supervision and to independently restructure the KTM Group. All other subsidiaries of KTM AG, in particular all sales companies, are not affected by this.
Restructuring plan within 3 months
"The aim of the proceedings is to agree a restructuring plan with the creditors within 90 days," Pierer wrote on Tuesday. The core shareholders are committed to KTM as well as to Pierer Mobility and its stock market listing. "The goal is clear: KTM should emerge stronger from this difficult time," explained major shareholder and KTM CEO Stefan Pierer.
The KTM Group's continued existence is to be secured in the long term by redimensioning the group. The cuts are deep. Production is to be reduced in such a way that the operating performance at the Austrian sites will be reduced by a total of over 1 billion euros in 2025 and 2026, Pierer Mobility wrote.
In addition, the restructuring is causing steep losses: one-off expenses such as necessary write-downs, for example for capitalized development costs, costs for staff reduction as well as the shortfall in fixed costs due to the reduced operating performance and other costs.
As a result, the company expects a negative annual result in the very high three-digit million range for the current financial year 2024, Pierer continued at the time. KTM CEO Stefan Pierer was combative: "Over the last three decades, we have grown to become Europe's largest motorcycle manufacturer. (...) Now we are making a pit stop for the future. The KTM brand is my life's work and I am fighting for it."
Shares gain
On the Swiss stock exchange, Pierer shares rose by 11.1 percent to 8.22 francs on Friday afternoon. This made up for part of the fall last Tuesday, when they plummeted 28 percent to 8.99 francs.
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