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Pierer Industrie AG, the parent company of KTM, has successfully avoided insolvency following a strategic restructuring effort. On Thursday, creditors at the regional court of Wels, Upper Austria, voted on a European restructuring plan (ReO) that has been applied for the first time in Austria since the introduction of a new restructuring directive on June 17, 2021.
This restructuring process allows companies that are in financial distress but not yet bankrupt to engage in a court-supervised overhaul, providing them the chance to stabilize their finances before declaring bankruptcy. Pierer Industrie AG opted for this path in order to responsibly manage its financing obligations totaling €247.5 million, pushing the repayment deadline over an extended two-year timeframe rather than settling these debts immediately.
The focus of this procedure was to extend the maturity dates of existing bonds and promissory notes. The court hearing, which lasted approximately one hour, concluded with the acceptance of the company’s proposal made on December 27, 2024. This decision effectively completes the restructuring process, allowing the company to repay its debts by the new deadlines of December 31, 2026, and December 31, 2027, instead of the original terms.
Headquartered in Wels, Pierer Industrie AG possesses a 50.1% interest in Pierer Bajaj AG, which controls 74.94% of KTM’s parent company, Pierer Mobility AG. Furthermore, Pierer Industrie AG holds an 80% stake in automotive supplier Pankl AG.
KTM Prepares for Key Court Ruling
On February 25, 2025, the regional court of Ried im Innkreis will convene to discuss the restructuring plan for KTM AG and its two subsidiaries. Creditors will have the power to approve or reject this proposed plan.
KTM is grappling with debts that exceed €2 billion, implicating 1,170 registered creditors, which include banks and suppliers, as well as approximately 2,500 claims filed by employees. Under legal requirements, the minimum repayment offer to creditors must be set at 30%. Recently, KTM improved its proposal by offering cash payments, ensuring that the repayment of the 30% will occur sooner, rather than over the typical two-year period, and will take place by the end of May.
This liquidity is expected to be sourced from the owners, new investors, and banks, with the total estimated to be around €600 million. Recently, US hedge fund Whitebox has suggested that a higher repayment rate would be more appropriate.
Simultaneously, in Mattighofen, efforts are underway to recommence production by mid-March. KTM has indicated that it is working diligently to secure the necessary liquidity, with reports suggesting that the required €150 million has already been committed by the owners.
The success of these plans is contingent on the upcoming vote by creditors scheduled for Tuesday. Should the proposed restructuring plan be rejected, the prospect of bankruptcy and the disintegration of the company may loom large, potentially leaving no funds available to restart production.
Source
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