Pierer Mobility Group has announced that KTM is entering voluntary restructuring to avoid bankruptcy amid ongoing financial problems at the company.
KTM’s financial problems have led to a series of drastic measures in recent months, with the management board reduced from six to two members, while several rounds of layoffs have been implemented.
In recent weeks, it was announced that KTM will lay off another 300 employees, while all production will be suspended in January and February.
This comes as the company’s share prices have fallen 90% from their peak in February 2022, with the necessary funding not expected to be secured to cover the needs.
Now the Pierer Mobility Group will file for bankruptcy in Austria, and the KTM brand will be separated and restructured in an attempt to avoid bankruptcy.
“KTM AG, a wholly owned subsidiary of Pierer Mobility AG, will submit a request to initiate the judicial restructuring procedure with self-government on November 29, 2024”the announcement reads.
“KTM AG’s financing needs are currently extremely high. Management does not expect to be able to secure the necessary interim financing on time.”
“The company’s executive board has decided to submit an application to initiate restructuring proceedings over the assets of KTM AG and its subsidiaries KTM Components GmbH and KTM F&E GmbH.”
“The procedure gives the possibility to continue the management of assets under supervision and for KTM to reorganize independently. All other subsidiaries of KTM AG, and in particular all sales companies, are not affected by this move.”
“The goal of the procedure is to agree the reorganization plan with the creditors within 90 days. The resizing of the group should not only ensure the continuation of KTM’s existence in the long term, but also create a basis for coming out of the process stronger.”
“Production downsizing should lead to a gradual adjustment of excess inventory at KTM and its dealers over the next two years.”
“This will result in a reduction in operational performance at the Austrian sites totaling over one billion euros in 2025 and 2026.”
“The restructuring process will result in additional potential losses, for example due to one-time costs such as necessary write-offs (e.g. for capitalized development costs) and staff reduction costs, as well as a shortfall in fixed costs due to reduced operations and other costs arising from the restructuring process. “
“Accordingly, for the current 2024 financial year, the company expects a negative annual net result in the very high three-digit million range for the above reasons.”
“Over the past three decades, we have become Europe’s largest motorcycle manufacturer”emphasized the executive director of KTM.
“We inspire millions of motorcyclists around the world with our products. Now we stop for the future. The KTM brand is my life’s work and I will fight for it.”
KTM has insisted over the past week that its MotoGP project will continue as normal in 2025 despite the money problems.
Source: www.moto-berza.com
