KTM Isn't Dead Yet

KTM has been circling the drain for some time now. The company has too many unsold bikes, too much debt, and too much going on to pull itself out of the $2.3 billion hole it's dug — things are looking dire. At least, they were looking dire, but yesterday's bankruptcy court appearance offered a glimmer of hope for the embattled motorcycle maker: The company only has a firm due date for 30 percent of its debt, an amount it realistically hopes can be raised with outside funding. 

Adventure Rider dug into the details behind the deal, finding that it managed to benefit both KTM and its creditors. This is rare in court hearings, where good compromises often leave everyone unhappy, but the KTM decision seems like a true win-win: Creditors get more money than they could squeeze from a bankrupt bike maker, and we get a KTM that still makes bikes. From Adventure Rider:

The deal is this. For now, KTM AG must repay €548M by May 23, 2025. This is 30 percent of the money KTM AG owes; perhaps more will be repayed in the future, but it seems that the debt is written off. The creditors may not be happy with this, but reports from Europe say they would only have received 15 percent repayment, half of what they're actually scheduled to receive, if there had been no deal worked out. They could also have been required to wait as long as two years for any money to be repaid, while the current deal sees the debt settled in three months. Much of KTM's debt had been purchased by the US-based Whitebox hedge fund, who was pressuring KTM to pay back more than the 30 percent. Euro magazines report KTM AG's reps had been trying to work out a deal to make everyone happy until late Monday, and that it took five hours in court today (February 25) to finalize the details of the current repayment plan. Reportedly, several dozen parties were in the courtroom, representing financial interests from all around the globe.

KTM hasn't yet announced who it'll turn to for that funding, though Adventure Rider put forth both KTM's existing parent company Pierrer and Indian motorcycle maker Bajaj as options. Bajaj has long worked with KTM, handling assembly on the 390 line, and it wouldn't be unreasonable for the company to throw a few more dollars down for more return. Others have raised KTM collaborator CFMoto as a possible investing party, and even the company's big European ADV competitor: BMW. 

CFMoto and Bajaj make sense because they already manufacture KTM bikes — moving from collaboration to part-ownership wouldn't be a major impact on either prospective buyer's product mix. BMW, on the other hand, competes with KTM across much of its lineup. Sure, BMW doesn't make dirt bikes like KTM, but the Bavarians are already winning on ADVs and sportbikes. KTM doesn't benefit BMW the way it would Bajaj or CFMoto, who would get to keep selling their existing bikes under the Austrian brand's export-friendly name. 

KTM is down but not out, and with any luck we'll see some investment in the company — and likely more than a bit of restructuring — in its future. Hopefully, the Austrians will be back and ready to race soon.