KTM Restructuring Approved by Creditors
by Ben Purvis
KTM creditors met and approved the company's proposals for restructuring, but there's still a large element of uncertainty as the deal requires KTM to pay € 584 million by 23rd May to settle 30% of its debts.
The plan was approved on 25th February at the regional court of Ried im Innkreis, Austria, that has been overseeing KTM's case since the company entered self-administration on 29th November last year. That process gave 90 days to come up with a viable route forward - one that assured that they creditors would be repaid at least 30% of the money they're owed.
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| Gottfried Neumeister |
KTM's plan involves paying back that legal minimum of 30%, but instead of the full two years that could have been allowed under the self-administration rules, the company only has until 23rd May this year to meet that obligation. While creditors will therefore only get back part of the debt, it does meant that the payment will be relatively soon in theory.
The creditors had little option other than to accept the proposals, as the alternative - breaking up KTM and selling its assets to pay debts - was calculated to return only 14.9% of the money.
The next challenge for KTM and its parent, Pierer Mobility, is to raise the money, plus the additional sum needed to get parts supplies flowing so production can get back underway. In total the company says it needs to raise around € 800 million to get back on course. Initially, it's had an injection of € 50 million from existing shareholders (BAJAJ) to get started in the right direction, and with the restructuring plan approved it's now possible for the negotiations to get underway with potential investors - with Citibank hired to pitch the opportunity.
There's no shortage of rumours as to where the investment will come from. Initially it's believed Citibank had a shortlist of 23 potential investors, which has been cut down to a reported seven interested parties since the plan was approved. No names have been officially mentioned, but potential investors are likely to include Bajaj - already a major shareholder in Pierer Mobility - and KTM's Chinese partners at CFMOTO. Wilder rumours in the media have even suggested BMW could be interested, although that idea has been dismissed by well-placed insiders.
Stefan Pierer, who handed over his position of KTM CEO to Gottfried Neumeister (but remained as Co-CEO during the self-administration process), has now stepped down altogether. He does however remain Co-CEO of Pierer Mobility AG, KTM's parent company.