KTM attempts to stave off bankruptcy with restructuring

The Pierer Mobility Group has announced that KTM is entering into voluntary restructuring in order to avoid bankruptcy amid ongoing financial woes in the company.

KTM’s financial problems have led to a number of drastic measures in recent months, with its board of directors slashed from six to two while several rounds of staff layoffs have been carried out.

In recent weeks it was reported that KTM would be laying off up to another 300 employees, while all production would be ceases in January and February.

This comes as its share prices have plummeted 90% since their peak in February of 2022, with the company not expecting to secure the necessary financing to cover the “high three-digit million” figure it needs.

Now it will apply for insolvency in Austria, with the KTM brand to be spun off and restructured in a bid to avoid declaring bankruptcy.

The full statement reads: “KTM AG, a wholly owned subsidiary of Pierer Mobility AG, will apply for the initiation of judicial restructuring proceedings with self-administration (Sanierungsverfahren unter Eigenverwaltung) on November 29, 2024.

“The financing requirements of KTM AG currently amount to a high three-digit million figure. The management now does not expect to be able to secure the necessary interim financing in time.

“The Executive Board of KTM AG therefore decided today to file the application for the initiation of judicial restructuring proceedings with self-administration over the assets of KTM AG and its subsidiaries KTM Components GmbH and KTM F&E GmbH.

“The proceedings give the opportunity to continue to manage the assets under supervision and to reorganize the KTM Group independently. All other subsidiaries of KTM AG, in particular all sales companies, are not affected.

“The aim of the proceedings is to agree a reorganisation plan with the creditors within 90 days. Redimensioning the group should not only secure the continued existence of the KTM Group in the long term, but also create the basis for emerging stronger from the proceeding.

“A redimensioning of production should lead to a gradual adjustment in excess stock at KTM and its dealers over the next two years.

“This will result in a reduction in operating performance at the Austrian sites totalling over €1 billion in the years 2025 and 2026.

“The restructuring process will result in additional potential losses, for example due to one-off expenses such as necessary write-downs (e.g. for capitalised development costs) and costs for staff reductions as well as the shortfall in fixed costs due to the reduced operating performance and other costs arising from the restructuring process.

“Consequently, for the current 2024 financial year, the company expects a negative annual net result in the very high three-digit million range due to the aforementioned reasons.”

KTM CEO Pierer added: “Over the past three decades, we have grown to become Europe's largest motorcycle manufacturer.

“We inspire millions of motorcycle riders around the world with our products. Now we are taking a pit stop for the future. The KTM brand is my life's work, and I will fight for it.”

KTM has insisted over the last week that its MotoGP project will continue as normal on 2025 despite the company’s money issues.