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Pierer Industrie AG, the parent company of KTM, has successfully navigated an insolvency crisis through a comprehensive restructuring process. On Thursday, creditors convened at the regional court in Wels, Upper Austria, to evaluate the European restructuring plan (ReO) for Pierer Industrie AG. This event marked a significant milestone, being the inaugural application of the restructuring directive in Austria, which became effective on June 17, 2021.
This judicial procedure is designed for companies that are teetering on the brink of insolvency but have not yet filed for bankruptcy. It offers these organizations the chance for supervised reorganization, allowing them to stabilize financially and avoid the dire consequences of insolvency.
Pierer Industrie AG initiated this restructuring to address its financing obligations, which total €247.5 million. The objective was to extend the repayment timeline, spreading it over two additional years rather than settling the debts immediately.
The restructuring focused primarily on extending the maturation periods of various bonds and promissory notes. The hearing held on Thursday lasted approximately one hour, concluding with the acceptance of the proposal put forth by the company on December 27, 2024. This outcome signifies the successful completion of the restructuring process.
As a result, Pierer Industrie AG is now set to repay its debts not by the initially agreed-upon deadlines but by new dates of December 31, 2026, and December 31, 2027.
Headquartered in Wels, Pierer Industrie AG possesses a 50.1% share in Pierer Bajaj AG, which owns 74.94% of KTM’s parent company, Pierer Mobility AG. Additionally, the company maintains an 80% stake in automotive parts supplier Pankl AG.
KTM Faces a Pivotal Decision
On February 25, 2025, the regional court in Ried im Innkreis is anticipated to assess the restructuring strategy put forth for KTM AG and two of its subsidiaries. The decision from creditors will be crucial in determining the fate of the proposed plan.
KTM is currently grappling with debts that exceed €2 billion, represented by around 1,170 registered creditors, which include both banks and suppliers. Furthermore, there are nearly 2,500 claims made by employees regarding the company’s financial situation.
The minimum legal obligation for creditors is set at a 30% repayment rate. However, in mid-February, KTM enhanced this offer by introducing a cash payment, planning to fulfill the proposed 30% repayment by the end of May, diverging from the standard two-year disbursement period.
Funding for the cash payment is expected to come from the company’s owners, new investors, and banks, with an estimated total of around €600 million set to be deposited with the insolvency administrator by mid-April. Additionally, US hedge fund Whitebox has recently called for a higher repayment rate from KTM.
In parallel, KTM is making strides to recommence production by mid-March. The company is actively working to secure the necessary liquidity, reportedly having already garnered the essential €150 million from its owners.
The upcoming creditors’ vote next Tuesday is critical; if the proposed restructuring plan is not approved, the company may face bankruptcy and potential disbandment, leaving little hope for the revival of production operations.
Source
www.autosport.com