Pierer Industrie AG avoids insolvency, decision on KTM imminent

Pierer Industrie AG, which indirectly owns KTM, has avoided insolvency after undergoing restructuring.

On Thursday, creditors voted on the European restructuring plan (ReO) of Pierer Industrie AG at the regional court of Wels, in Upper Austria. This was the first time that this procedure was applied in Austria under the restructuring directive, which came into force on 17 June 2021.

In principle, this process allows companies at risk of insolvency but not yet insolvent to undergo a court-supervised restructuring procedure, giving them the opportunity to recover financially before having to declare bankruptcy.

Pierer Industrie AG pursued this restructuring process to fully repay financing obligations amounting to €247.5 million. The aim was to extend the repayment period over two years instead of settling the debts immediately.

The process mainly concerned the extension of maturing bonds and promissory notes. The hearing on Thursday afternoon lasted about an hour, and the proposal submitted by the company on 27 December 2024 was accepted. This marks the completion of its restructuring process.

As a result, the debts will not have to be repaid at the originally agreed dates but instead by the new deadlines of 31 December 2026 and 31 December 2027.

Based in Wels, Pierer Industrie AG holds a 50.1% stake in Pierer Bajaj AG, which in turn owns 74.94% of KTM’s parent company, Pierer Mobility AG. Additionally, Pierer Industrie AG holds an 80% stake in automotive supplier Pankl AG.

KTM faces crucial hearing

KTM logo

Photo by: Rob Gray / Polarity Photo

On 25 February 2025, the regional court of Ried im Innkreis will vote on the restructuring plan for KTM AG and two of its subsidiaries. Creditors will then decide whether to approve the proposed plan.

KTM has accumulated debts exceeding €2 billion from 1,170 registered creditors, including banks and suppliers. Additionally, there are around 2,500 claims from employees.

The minimum legal offer to creditors stands at a 30% repayment rate. In mid-February, KTM improved the offer with a cash payment, meaning that the proposed 30% will not be paid over two years, as is customary, but by the end of May.

This money is expected to be provided by the owners, new investors and banks, and deposited with the insolvency administrator by mid-April. The amount is estimated to be around €600 million. Recently, US hedge fund Whitebox advocated for a higher repayment rate.

Meanwhile, efforts are under way in Mattighofen to resume production by mid-March. KTM has stated that it is working on securing the necessary liquidity, with the required €150 million reportedly already committed by the owners.

The prerequisite for this is the creditors' vote scheduled for next Tuesday. If the plan is rejected, bankruptcy and the break-up of the company could be imminent. In that case, it is unlikely that any funds will be available to restart production.