Motorbike Maker KTM’s Creditors Take 70% Hit in Restructuring.
Creditors of Austrian motorbike maker KTM AG approved a restructuring plan that will write off 70% of the company’s debt and resume production with the help of new investments.
KTM will need to secure €548 million ($575 million) of funding by May 23 to pay creditors, according to the plan that was approved on Tuesday by a majority of creditors. An extended circle of shareholders will provide additional financing to resume production, the company’s parent, Pierer Mobility, said in a statement.
Share of Pierer Mobility rallied 11% in Zurich after the announcement.
The approval comes in spite of opposition from US hedge fund Whitebox Advisors, a holder of KTM’s promissory notes, who had been calling for lenders to reject the company’s plan. The investment fund had been seeking allies among other investors of the Schuldschein loans, including small savings banks, to convince the company of its own proposal.
KTM filed for insolvency proceedings in Austria in November, as slowing sales after a boom during the coronavirus pandemic led to a build-up of inventory. The company is backed by Bajaj Auto, a manufacturer that’s part of the eponymous Indian conglomerate, and Stefan Pierer an Austrian entrepreneur known for his turnaround bets.
Whitebox had sought to allow creditors to participate in any eventual benefits from KTM’s turnaround with its alternative plan. The proposal was rejected by insolvency administrator Peter Vogl.
Creditors filed insolvency claims totaling around €2.2 billion, the creditor association KSV1870 said in a statement. About €2 billion has been recognized by the administrator.
The company has yet to announce the source of new funding needed to pay creditors. Earlier negotiations led by Citigroup Inc. had attracted several investors, KTM said last month.
Source: BNNBLOOMBERG
