KTM's Rescue Efforts Turn Into a Race Against Time

The situation surrounding KTM continues to deteriorate as delays in discussions with potential investors jeopardize a planned capital increase of EUR150 million initially scheduled for this Friday. The company's parent organization, Pierer Mobility, announced late Tuesday that this agenda item has been removed from the upcoming extraordinary general meeting.

According to the statement, the capital measure could not be executed under the proposed conditions and within the required timeframe. This development highlights the ongoing uncertainty regarding negotiations with prospective investors, which are crucial for a positive forecast on the company's continuity. Without a solid commitment from investors, preparing an annual financial report becomes impossible, leading to significant legal hurdles for both the capital market prospectus and the capital increase.

Hans Lang, a spokesperson for Pierer Mobility, explained that four items were originally on the agenda for the extraordinary general meeting. Apart from the report on the loss of half of KTM's capital--which necessitated the meeting--the agenda included the planned capital increase. Existing shareholders had the opportunity to subscribe to shares priced at EUR7.50 each, but this item has now been withdrawn. Consequently, the related agenda item concerning the conversion of EUR200 million already paid by KTM's co-owner Bajaj into equity has also been eliminated.

While Bajaj's investment has largely been disbursed, the company is now under pressure to find alternative sources for the anticipated EUR150 million from the capital increase. Pierer Mobility indicated that they are actively pursuing alternative options to raise the necessary equity to satisfy the requirements of the restructuring plan. Observers have noted that this situation casts doubt on the overall viability of the rescue plan.

Insider sources suggest that negotiations with potential investors may be more complicated than initially anticipated, possibly concerning the share price or the conditions under which Bajaj would provide further financial support. The discussions also revolve around determining who will hold influence over KTM moving forward and whether Stefan Pierer will remain involved in the company's management. Investors appear to be primarily interested in KTM itself rather than in the publicly traded Pierer Mobility. However, untangling the complex corporate structure and supplier obligations may present significant challenges.

Another agenda item for the upcoming general meeting includes authorizing the board to pledge shares held in KTM AG. This move would allow potential investors to secure access not only to Pierer Mobility but also directly to their shares in KTM. Time is of the essence, as the restructuring plan requires a payment of 30 percent by May 23, totaling up to EUR600 million. In April, creditors approved the restructuring plans for KTM AG, KTM Components GmbH, and KTM Research & Development GmbH.

Additionally, Pierer Mobility has postponed the annual financial report that was set to be released at the end of April, with plans to disclose additional financial figures next week.