The company is heavily in debt and “faces significant obstacles” on multiple fronts
- KTM is preparing for bankruptcy as they are saddled with hundreds of millions of dollars in debt and do not expect to be able to obtain interim financing in time to meet their obligations.
- On Friday, they will apply for self-administration, which will give them time to work with creditors.
- The exact outcome is unclear, but there has been talk of job cuts and production cuts.
KTM has grown to become Europe’s largest motorcycle manufacturer, but this is a hollow victory as the company is insolvent and they are preparing to launch a “self-administered legal restructuring process”. The application is due on Friday and the company hopes to have all the work completed within 90 days.
The company declined to reveal specifics, but said they “faced significant obstacles.” They added that self-management would help them “adapt to a changing market” and secure their position as a global leader in the motorcycle industry.
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While KTM embraces powder-puff PR, their parent company is more direct. Pierer Mobility AG specifically said the motorcycle company’s financing needs were “in the high triple-digit million range.” Management does not expect to obtain the necessary interim financing in a timely manner, which helps explain the filing. The move will give the company time to work with creditors to find an ideal solution that works for everyone.
In the short term, the impact will be far-reaching, as “the restructuring process will result in additional potential losses.” Pierre went on to mention layoffs and “a realignment of production.” The company added that the latter cuts should help KTM and its dealers cope with overstock issues.
The problems have existed for years, with Pierre recently citing a host of problems, including Europe’s economic stagnation and Germany’s recession. In the United States, they blame rising interest rates and high living costs for affecting consumer purchasing power.
Back to today’s news, KTM CEO Stefan Pierer said “we are taking a break for the future” but “the KTM brand is my life’s work and I will fight for it.”
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