Bajaj Provides Financial Support to Rescue KTM

In a significant development for the motorcycle manufacturer KTM, Bajaj Auto International Holdings B.V., a co-owner of the company, has stepped in to provide the necessary funds to fulfill creditor obligations and prevent bankruptcy for KTM AG and its subsidiaries, KTM Components GmbH and KTM Forschungs & Entwicklungs GmbH. This announcement was confirmed by the company in an official release on Thursday morning.

Bajaj is offering a loan amounting to EUR450 million, while an additional EUR150 million will come from the parent company Pierer Mobility. The total required to finance the creditor claims under the three restructuring plans amounts to EUR525 million.

In related news, long-serving KTM CEO Stefan Pierer will exit the board of Pierer Mobility following the completion of the restructuring process in June. Verena Schneglberger-Grossmann, who has been part of the group since November 2015, has been appointed as a new board member to support CEO Gottfried Neumeister.

Earlier this week, the company had confirmed that they had secured financing commitments to meet the 30% cash quota as part of the insolvency proceedings. Although specific details were kept under wraps due to ongoing processes, it was widely known that Bajaj, which is involved through Pierer Bajaj AG, was the key financial backer. This news has brought relief to stakeholders in the Innviertel region and positively impacted Pierer Mobility's stock prices.

The deadline for the cash quota is set for Friday. KTM filed for insolvency at the end of November 2024 and initiated a self-administration restructuring process. Claims from 1,250 suppliers, banks, and 2,600 employees totaled approximately EUR2.2 billion. The restructuring plan, approved by creditors on February 25, stipulates a 30% cash payout, which translates to about EUR600 million needing to be deposited with the insolvency administrator, Peter Vogl, by May 23 at midnight to avoid inevitable bankruptcy.

Securing funding for this payout required an investor. In December, Pierer Mobility engaged the services of Citigroup, a US investment bank, to assist in finding a suitable investor. Bajaj was consistently considered a viable option. The Indian conglomerate had previously provided financial assistance to ensure the continuity of operations after the insolvency declaration, which had led to a suspension of production from December 13 to March 17. However, as of early May, production was once again reduced due to supply chain issues stemming from the insolvency.