KTM Troubles Get Worse, While Citibank Gets Involved

It seems the financial problems at KTM may be worse than initially feared, with reports now indicating the Austrian motorcycle manufacturer’s debts add up to approximately 2.9 billion euros (when its sister companies are added in) and an inability to pay its Austrian employees over December. Now, Citibank is involved, trying to help and sort out the mess.

The numbers initially bandied about this fall were bad, very bad for KTM, but its parent company seemed to think things could be sorted out. Now, the numbers look way worse. The explanation is basically summed up like this: KTM saw a COVID-induced boom and built a lot of bikes hoping to capitalize, but sales dropped off just as inventory picked up, leaving dealers and KTM itself with unsold bikes that represent an expensive liability. Of course, there were other expensive financial deals, like the acquisition of MV Agusta as well. That’s also up in the air at this point.

Initially, KTM went into self-regulation to solve these problems, but now they’re looking for outside help. In a recent statement from KTM, leadership announced:

“PIERER Mobility AG is currently in talks with potential strategic and financial investors. These include both existing partners as well as new strategic and financial investors.

“Citigroup Global Markets Europe AG was appointed today to support this process in a structured, transparent and efficient manner in the interest of all stakeholders.

“The objective of the investment process is to have investors subscribe to a necessary cash capital increase or financial instruments of PIERER Mobility AG. These funds will be used to strengthen the PIERER Mobility Group, in particular KTM AG.

“In order to finalize the structured investor process, it will be necessary to convene a shareholders’ meeting in due course to pass the relevant resolutions.

Depending on your perspective, the news of new ownership coming in and ending Pierer’s control of KTM (and Husqvarna, and GasGas) might be a disappointment… or it might be good to hear, if you’re a KTM employee. The latest news from Europe says KTM’s employees are not being paid. Statements from the Upper Austrian Chamber of Labour say November wages and the December bonus have not been paid out to employees, despite company promises. It appears they are instead going to receive some funds from an Austrian insolvency remuneration fund that pays out workers whose employers have gone bust. For KTM’s employees to be in such a spot paints the company’s finances in a very bad picture indeed.