Photo credit: www.autosport.com
KTM Enters Self-Administration Amid Financial Struggles
Pierer Mobility group has declared that KTM, the prominent motorcycle manufacturer, will enter self-administration while initiating judicial restructuring proceedings. This decision comes as the company faces a significant financial downturn, urging it to secure a minimum of €100 million to sustain operations beyond 2024.
The Austrian brand, which is actively competing in the MotoGP circuit, has already had to lay off hundreds of employees and is planning to halt motorcycle production during January and February of the upcoming year.
On Tuesday, Pierer Mobility AG, the owner of KTM, revealed that the management team anticipates being unable to secure the necessary financing within the required timeframe, prompting the shift towards a formal restructuring process.
KTM has chosen the path of restructuring with self-administration, allowing the existing management to retain control throughout the proceedings. They will operate under judicial oversight to formulate and execute a reorganization strategy.
The company aims to reach an agreement on this restructuring plan with its creditors within the next 90 days.
Strategic Reorganization Plans
Pierer Mobility has articulated that the goal of this restructuring effort is not only to ensure the long-term viability of the KTM Group but also to position it to emerge stronger post-proceedings. The strategy includes resizing production capabilities to manage surplus inventory at KTM and its dealerships over the next couple of years.
According to the company’s estimates, this recalibration in production may lead to a decline in operational capabilities at its Austrian facilities, projecting a financial impact exceeding one billion euros during 2025 and 2026.
The restructuring initiative is expected to incur additional losses, which may stem from various one-time expenses. These expenses could encompass necessary write-downs, costs associated with workforce reductions, and a decrease in fixed costs tied to lowered operational performance, along with other expenditures emerging from the restructuring effort.
As a consequence, KTM anticipates reporting a substantial net loss for the 2024 financial year, projected to fall within the high three-digit million euro range due to the outlined financial pressures.
Source
www.autosport.com