On Tuesday, creditors will meet at the Ried District Court to vote on a plan to save KTM. The plan offers a cash payment of 30% to creditors. To move forward, KTM needs support from investors and a majority of creditors. The decision will determine whether the company can keep running or face insolvency. KTM also needs €600 million from investors to restart production. If the vote fails, creditors may only recover 15% of their claims.
KTM’s Financial Issues
KTM, a major motorcycle manufacturer, has serious financial problems. The company owes €1.7 billion to banks with little collateral. This debt has put the company in a tough spot. In addition to this, KTM has faced declining sales and low demand. Despite this, the company kept making bikes. It relied on credit to continue operations. This has made the company’s financial situation worse. From January 2023 to November 2024, KTM’s debt grew by over €1 billion. Net debt has now reached €1.35 billion.
The Rescue Plan
KTM’s rescue plan offers a possible way out. The plan proposes paying 30% of claims to creditors. This would help reduce the company’s debt quickly. However, the plan needs approval from a majority of creditors. KTM must also secure €600 million from investors. This money would help restart production in the company’s Mattighofen factory by March 17. If the plan passes, KTM can continue operations. But if it fails, KTM may go into full insolvency.
Total claims against KTM are €2.25 billion, including about €22 million owed to employees. The company is hoping that creditors will approve the plan. If they do, KTM can stay in business.
Challenges to the Rescue Plan
The rescue plan has faced some resistance. Banks have criticized the 30% payment offer. They argue that creditors should receive more. Some banks have tried to block the plan because they want to recover more than 30%. They also want to prevent former CEO Pierer from staying at the helm of the company. The banks’ actions could delay the process and make things worse for employees.
Stefan Zöchling, an investor, has spoken out against the banks. Zöchling, who wants to invest €740 million in KTM, believes that a quick resolution is necessary. He is working with an Indian partner, Bajaj, and hopes to keep most of KTM’s shares in Austrian hands. Zöchling argues that delaying the plan would hurt employees and suppliers.
The Importance of the Creditors’ Vote
The creditors’ vote will determine KTM’s future. If the plan passes, the company can avoid insolvency and get back on track. The plan offers creditors immediate payment of 30%. It would also help maintain important supplier relations.
However, if the plan fails, KTM will face serious problems. A mass administrator would be appointed. This would mean that creditors could recover only about 15% of what they are owed. KTM would likely go into full bankruptcy, leading to job losses and further financial damage.
Gerhard Weinhofer of Creditreform has praised the rescue plan. He believes it is a sensible solution to the crisis. Weinhofer said the plan will ensure quick payments to creditors and help keep KTM’s relationships with suppliers strong.
Investor Offers and Future Outlook
The future of KTM depends on how investors and creditors respond to the rescue plan. If the plan passes, KTM will receive the funding it needs to restart production. Investors, like Zöchling and Bajaj, have offered significant financial support. However, they are also facing obstacles. The banks’ refusal to approve the plan could delay any recovery efforts.
If the banks block the plan, KTM may face much more difficult challenges. The company would struggle to repay its debt and keep its operations running. Without support, KTM could face total insolvency.
KTM’s Road Ahead
The coming vote is a critical moment for KTM. It will determine whether the company can continue operations or go bankrupt. While the rescue plan offers a path forward, the resistance from banks and some creditors could derail the process. Time is running out for KTM to secure the financial backing it needs.
For more updates on KTM’s situation, visit Euro News 24.