KTM Needs $600 Million Loan Ahead of May 23 Funding Deadline. Bajaj Loan for $632 Might Be the Rescue
Over the weekend Bloomberg reported that Bajaj Auto Ltd., the European unit of the India-based company, and co-owner of KTM AG, has secured a one-year loan of $632 million to keep company going. According to the insolvency plan that the Austrian-based motorcycle manufacturer agreed to, KTM has until this Friday (May 23) to deposit approximately $600 million with its insolvency administrator. This loan should make sure KTM is able to meet that financial commitment.
Read more via Bloomberg (although the link my require a subscription).
Motorcycle website www.rideapart.com has been doing a fantastic job following the KTM story, it described this latest news, in part, like this:
Last week, Bajaj Auto, through its European arm, announced it had taken out an unsecured loan of 566 million euros (that’s about $632 million) from JPMorgan, DBS, and Citigroup. On paper, the loan is described as being for “investments,” with no mention of KTM anywhere in the exchange filing.
But let’s be real: given the timing, the amount, and the context, it doesn’t take a forensic expert to figure out where this money is probably headed.
Read the full update at RideApart for some more clarity on where KTM could be headed in the future. It's an excellent recap of the entire situation, and what could come next.
The India-based Bajaj company has been a business partner of KTM since 2007, first with a small stake, but eventually growing into nearly 50 percent ownership.
Rumors of KTM's financial struggles began to surface a year ago, with the company sitting on a large stock of unsold motorcycles (of all three brands that it controls, KTM, Husqvarna and GasGas). To put it simply, KTM ramped up motorcycle production in hopes of growth based around the high times of pandemic-fueled outdoor activity. It also aggressively started making moves into the eBicycle space. While sales in both categories boomed for a bit, motorcycle sales have returned to pre-pandemic levels, and the bicycle business has slowed even more.
Facing mounting debt, KTM declared itself insolvent in late 2024 and began a 90-day process to get its financial house in order. Stefan Pierer, who purchased KTM from backruptcy in the early 1990s and grew it into a powerhouse, agreed to step down as CEO. In February an agreement was reached to pay back just 30 percent of the debt to creditors. KTM appeared to be saved by the agreement, and the production line in Austria began to roll again. It didn't last long, though, as supply chain issues and a lack of parts in the assembly area led to another production shutdown in April.
The month of May has been clouded with stories of KTM needed another major cash infusion to get the production lines restarted. During the weekend of the Salt Lake City Supercross, the scuttlebutt in the pits was that the company was in serious jeopardy unless it could find another major infusion of cash, with a late-May deadline looming. It appears Bajaj might have come to the rescue.
Does this mean KTM's production line will now roll without another interruption? Will Bajaj try to take more control over the direction of the company?
