Pierer Mobility AG, the owner of several motorcycle and scooter/e-bike brands, announced last week that its subsidiary KTM is undergoing a self-administered restructuring to shed debt without involving bankruptcy courts. Pierer has failed to attract bridge financing for the motorcycle and X-Bow maker since its last call for cash.
This 90-day restructuring period is roughly equivalent to a Chapter 11 proceeding in U.S. bankruptcy court, albeit more hands-off. The self-administration period allows the company to negotiate new financing terms with creditors before it could be compelled to hand over control of its assets to court-appointed bankruptcy stewards.
KTM co-CEOs Gottfried Neumeister and Stefan Pierer had another term for it: “Pitstop for the future.” Sure.
In what has also become a more common (and concerning) narrative across the automotive industry, KTM reported a precipitous drop in sales in the first half of 2024. The company’s debts had mounted to more than $1.5 billion as of June, per Motorcycle.com, while it pulled in 27% percent less revenue over the first six months of the year compared to 2023. KTM also owns Husqvarna and holds a majority stake in MV Agusta.
Neumeister and Pierer also hinted at KTM’s reliability concerns. ADV Pulse suggests those comments refer to ongoing quality control issues surrounding the company’s 790 and 890 models (along with the Husqvarna Norden 901). Customer reports of premature camshaft wear in bikes equipped with the LC8c parallel twin engine prompted an official response from KTM in September.
KTM also blamed Covid (and the company’s response to it) for some of its woes. The whiplash of initial production struggles followed by a rapid increase in output led to an oversupply of inventory after pandemic-era demand softened.
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