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KTM restructuring process: Production halted again, shares pledged

Starting next week, KTM production will be halted again for three months – Pierer Mobility decides to pledge shares in order to raise external capital

At the end of April, the restructuring process at KTM AG in Austria made headlines again. Motorcycle production must be halted once more. In addition, it was decided that Pierer Mobility AG may raise external capital by pledging shares.

Two items were removed from the agenda ahead of Pierer Mobility AG’s extraordinary general meeting, which took place on Friday morning. These related to a capital increase of €350 million to comply with the restructuring plan.

On Tuesday evening, an ad hoc announcement stated that the capital measures could not be implemented “under the proposed conditions and within the specified time frame.”

The decisive deadline for the future of the company is May 23. By then, the restructuring quota of 30 percent must have been paid into a trust account held by the insolvency administrator. This amounts to around 600 million euros.

Investors are needed to achieve this. According to a statement issued by Pierer Mobility AG on Tuesday evening, the company is “in the final stages of negotiations with equity and debt investors.” 150 million has already been provided by KTM partner Bajaj.

Because there is still no binding financing commitment for the remaining money, the publication of the annual report for 2024 has been postponed until the end of May. Preliminary figures are to be announced at the end of April.

At the annual general meeting, a proposal by the management board and supervisory board remained on the agenda. A vote was taken to allow the pledging of KTM shares in order to raise up to 500 million euros in debt capital to pay the quota.

Forty shareholders attended the extraordinary general meeting of KTM parent company Pierer Mobility at the “House of Brands” in Munderfing on Friday. Some were represented by proxies, so that the votes of a total of 110 shareholders were counted.

A total of 27.31 million shares were voted, representing 80.80 percent of the share capital. The proposed pledging of KTM shares was thus approved by an overwhelming majority of shareholders.

Production halt due to supply bottlenecks

On Thursday, it was announced that production in Mattighofen would have to be interrupted again. The assembly lines will be shut down from April 28 to July 27. According to the current plan, production will then resume at full capacity on four lines.

The reason for the production stoppage is supply bottlenecks. Since filing for insolvency, KTM has been drawing on its own inventories. These are now depleted. Since mid-March, when production resumed, around 4,200 motorcycles have been built.

As part of the insolvency restructuring process, KTM was not allowed to enter into any financial commitments. According to KTM CEO Gottfried Neumeister, it was therefore “not surprising” that the warehouses would empty.

“You can’t blame suppliers for not committing to ordering more materials during this 90-day insolvency period,” Neumeister told ORF. “Some parts have a delivery time of 20 weeks.”

“And now we just have to wait until we get the next batch of materials. It came as no surprise to us; it’s simply a consequence of this 90-day insolvency procedure, which meant we couldn’t enter into any commitments.”

Under a new works agreement concluded between the Executive Board and the Works Council, working hours will be reduced to 30 hours per week from May 1 to July 31. Wages and salaries will be cut by around 20 percent. There will be no layoffs.

“That was also on the table, and we said that was out of the question for us,” Neumeister emphasized. ”That’s why I would like to thank all employees and everyone involved for their solidarity.”

Around 1,200 employees work in production. Representatives of the employers and employees emphasize the positive atmosphere of the talks this time around. The union is also satisfied. KTM will bear the costs of the production downtime without government support.

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