Possible financial aid of up to €500 million provided for KTM's rescue, with shares used as collateral.
Pierer Mobility AG, the parent company of KTM, faces amended restructuring plans due to delays in the planned capital increase through issuance of new shares. An extraordinary general meeting scheduled for next Friday, initially slated to include a capital raise, has had these items removed from the agenda. The company stated that the capital measures "cannot be implemented under the proposed conditions and within the given timeframe."
Pierer Mobility disclosed in February that it requires approximately €800 million in fresh capital to finance ongoing production and meet the restructuring plan's demands. Although €200 million from Indian co-owner Bajaj Auto has been secured, a new plan is necessary to find the remaining €150 million from the issuance of new shares.
The company is collaborating with its core shareholder to develop an alternative for raising the required equity capital. Detailed decisions will be made at a later general meeting.
Creditors are expecting a quota of roughly €600 million to be financed, as part of KTM AG, KTM Components GmbH, and KTM Research & Development GmbH's restructuring. The restructuring quota of 30%, payable by May 23, 2025, necessitates €600 million. Despite negotiations being in their final stages with equity and debt capital investors, no positive going concern prognosis can be issued without binding financing commitments. In such a case, the company would have to be valued at break-up values, causing the delay of the annual financial report's publication.
Recent discussions suggest that up to €500 million worth of KTM AG shares may be pledged, although the investor for these securities remains unspecified. The exact shares to be given to the investor have been clarified, but confidentiality is being maintained.
After halting motorcycle production in December 2024, KTM is expected to gradually restart production in March 2025, facilitated by the €150 million cash injection from Bajaj Auto. Stefan Pierer, the former CEO of Pierer Mobility AG and KTM AG, has stepped down, with Gottfried Neumeister taking over operational responsibilities.
Pierer Mobility AG needs to find an alternative method to raise the remaining €150 million in fresh capital to finance ongoing production and meet the restructuring plan's demands, as the planned capital increase through issuance of new shares cannot be implemented under the proposed conditions and within the given timeframe. The company aims to negotiate with its core shareholder to devise a new finance strategy, with detailed decisions to be made at a future general meeting.
