Having surrendered itself into a court-controlled administration process in the final months of last year, Europe’s largest motorcycle manufacturer Pierer Mobility and its core KTM brand still (a as at late January when BDN went to press) has no outcome in sight for what has become a long and winding tale of bankruptcy avoidance.
According to the Austrian business newspaper Der Standard, KTM is continuing its quest to find fresh investors or banks to inject capital into the beleaguered brand. In December, eponymous chief executive Stefan Pierer presented an initial restructuring plan that offered creditors 30% of what is owed, with a theoretical breathing space until February to decide if they will accept the plan. To meet the quota, the company needs significant liquidity input, otherwise it could face being broken up and sold to the highest bidder.
KTM’s judicial restructuring administrator, a lawyer called Peter Vogl, concluded that KTM could not cover the 30% on its own. But he opined that it had enough money to survive until 19 January at least. At meetings held in December with creditor banks, Pierer and his co-CEO Gottfried Neumeister presented an alternative plan to divest the subsidiaries – GasGas, Husqvarna and KTM. However, the banks rejected this on the basis that they wanted the same collateral they had held in October and insisted the subsidiaries only transfer as much money to Pierer Mobility as is necessary for the group’s operation. They took the view that selling the brands would make them worse off.
Then, on 17 December, Pierer Mobility appointed investment bank Citigroup Global Markets Europe to reorganise its ownership structure. The statement announcing this move said Pierer Mobility was currently in talks with potential strategic and financial investors. These included both existing partners as well as new faces. Citigroup would be supporting this process in a “structured, transparent and efficient manner in the interest of all stakeholders”. The statement went on to say the investment process objective is to have investors subscribe to a necessary cash capital increase. These funds will be used to strengthen the Pierer Mobility Group, in particular KTM. And in order to finalise the structured investor process, it will be necessary to convene a shareholders’ meeting in due course to pass the relevant resolutions.
Essentially, Citibank is helping Pierer look for investors, which may come from its Indian and Chinese partners. Such “strategic and financial investors” were apparently taking part in the process but would be obliged to submit their binding offers by mid-January. Whether these submissions took place in unclear.
Indian partner Bajaj Auto reportedly offered up to €300m to support the “recovery” of Pierer Mobility, in which it holds an approximate 37% stake. Pierer’s Chinese partner CFMoto was also allegedly prepared to provide €350m to €700m, to restructure Pierer Mobility, contingent on acquiring the majority ownership.
Further to this, Austrian creditor banks want any new investors grouped together, in line with the judicial restructuring administrator’s report. However, Stefan Pierer disagrees with the plan to get there, and some of the finer legal points. The banks want the final say, but Pierer may find another new investor with Citigroup to forego such an option. And, of course, he might not…
The overall debt picture remains as clear as mud. One version claims that Pierer Mobility’s debts to KTM totalled €371m by October 2024. In addition, 50.1% of Italian motorcycle manufacturer MV Agusta was aquired in 2020 and 2022 at a cost of €220m. That stake has apparently been written off and is now up for grabs again. But according to the official administrator’s report, the Group’s’s downfall was caused by debt rising from €255m to €1.7bn between 2023 and the end of October 2024. Who do you believe?
While all of this was going on, KTM/Pierer put out a flashy “Here To Stay” Xmas video message on 20 December and co-CEOs Stefan Pierer and Gottfried Neumeister confessed to a sense of relief: “Today, the judge made the decision that we can continue to operate for the duration of the proceedings,” they claimed.
However, Stefan Pierer conceded it was just the beginning of a long race. “Today was only the first step in the 90-day reorganisation proceedings,” he said. This means that we will continue to work hard for our employees, our suppliers and our dealers to make this company viable for the long term. After all, we are talking about the business location and an Austrian brand that is well known from Los Angeles to Sydney. The most important thing is to save as many jobs as possible. In this context, we are looking for new investors and are trying to reach a sustainable solution together with our creditors. We are having good discussions with the banks in particular.”
Concluding, Pierer and Neumeister added: “We would like to take this opportunity to express our special thanks to all our employees who continue to work for our company despite the adverse circumstances, the uncertainty and the sacrifices. And we would also like to thank our KTM fans and loyal customers all over the world for their support. You all give us strength and courage!”
Two days into the New Year, yet another mysterious chapter emerged. According to a statement from the company: “It is intended to convene an extraordinary general assembly at the end of January 2025, at which elections to Pierer Mobility’s Supervisory Board are to be held. In addition, new conditional capital is to be authorised and created at this general assembly in order to enable flexible issue financial instruments by the Executive Board.”
However, these elections aren’t quite what they seem, because their principal task appears to be giving the heave-ho to veteran Supervisory Board chairman Josef Blazicek, a former investment banker who moved into the motorcycle industry and has held this role for 17 years. Blazicek’s resignation will make room for the elevation of Stephan Zöchling to the Supervisory Board. Currently heading up Remus Performance Exhausts, Zöchling allegedly brings with him pertinent experience of restructuring in the automotive sector. Does his imminent arrival indicate a happy ending? Not too many would be betting on that.
In fact, as BDN went to press, all bets were off before the end of January, when Stefan Pierer abruptly stepped down from his role as chief executive, handing the company reins to recently installed co-CEO Gottfried Neumeister. Whether Pierer jumped or was pushed is moot. His departure almost exactly coincided with news that significant investor interventions had been tabled and briefings for creditors were set to take place on 24 January. If a turnaround with Neumeister in the saddle is on the cards, the crucial date for its delivery is now 25 February.