- KTM is preparing to go bust as they have hundreds of millions in debt and don’t expect to receive interim financing in time to meet their obligations.
- On Friday, they’ll file for self-administration and this will give them time to work with their creditors.
- The exact outcome remains unclear, but there’s already talk of job cuts and curtailed production.
KTM has grown to become Europe’s largest motorcycle manufacturer, but that’s a hollow victory as the company is insolvent and they’re preparing to initiate a “legal restructuring proceeding with self-administration.” The application will be filed on Friday and the firm hopes to have everything wrapped up within 90 days.
The company declined to go into specifics, but said they’re “facing significant hurdles.” They added self-administration will help them “adapt to changing markets” and secure their position as a global leader in the motorcycle industry.
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While KTM embraced powder puff PR, their parent company was more direct. In particular, Pierer Mobility AG said the motorcycle firm has financing requirements in the “high three-digit million figure.” Management didn’t expect to get the necessary interim financing in time and this helps to explain the filing. The move will now give the company time to work with creditors and find a solution that, ideally, works for everyone.
In the short term, the impacts will be profound as the “restructuring process will result in additional potential losses.” Pierer went on to mention staff reductions and a “redimensioning of production.” The company added the latter cuts should help KTM and its dealers cope with excess inventory.
The problems have been building for years and Pierer recently cited a host of issues including a stagnating European economy as well as a recession in Germany. In America, they blamed elevated interest rates and a high cost of living for impacting consumer purchasing power.
Getting back to today’s news, KTM CEO Stefan Pierer said “we are taking a pit stop for the future,” but “the KTM brand is my life’s work and I will fight for it.”
