Bajaj Auto to take control of KTM motorcycles

INDIAN motorcycle giant Bajaj Auto is set to take control of debt-ridden KTM AG with a $US906 million ($A1.39b) package that aims to revive the struggling Austrian manufacturer.

According to Reuters, the deal will see motorcycle manufacturer Pulsar, which has been a minority investor in KTM since 2007, shift from a dormant stakeholder to a strategic lead, aligning governance and injecting fresh capital into the 91-year-old company.

KTM AG, which developed and sells motorcycles under the KTM, Husqvarna, and GasGas brands and exports to over 80 countries, filed for court restructuring proceedings in November amid what Reuters describes as severe liquidity issues.

The manufacturer’s creditors are set to receive 30 per cent of their claims in cash before the end of May.

In an official statement, Bajaj Auto said the move will help KTM pare down debt while at the same time shaping the future of one of the world’s most admired two-wheel marques.

“In a significant move underscoring its commitment to its long-term partnership with KTM and recognising the opportunity in the exciting world of premium/sports motorcycles given the brand’s preeminent position, Bajaj Auto Limited, through its wholly owned subsidiary Bajaj Auto International Holdings BV intends to take control of the KTM business that is headquartered in Austria, subject to necessary regulatory approvals,” it stated.

“With this action and post requisite approvals coming through, Bajaj will shift gears from hitherto being a dormant minority investor to a majority owner in the global KTM company, whilst it continues to accelerate the thriving KTM business that is run out of India under the joint development program, where it develops, makes and sells in India as well as exports to 80 countries across the KTM network.

“Simultaneously, BAIHBV has arranged a debt funding package of €800 million to enable the continuity of the KTM business by paying off the approved quota to the creditors in furtherance of KTM’s debt restructuring with the approval of the competent Court in Austria and infusing funds into the company to revive its operations and working capital cycle.

“Of this total €800 million debt package, €200 million has already been infused into the company so far and the balance €600 million is being done now.

“This twin moves of taking ownership (subject to approvals) and paring down debt by providing liquidity at a crucial stage, positions Bajaj Auto as a driving force in shaping the future of one of world’s most admired high performance motorcycle companies.”

Bajaj Auto said it will work to immediately revamp KTM AG’s governance framework, put in place a program aimed at restoring momentum and competitive growth, pursue synergistic opportunities (assumedly with its own portfolio of machines), and to explore potential partnerships and collaborations to build what it describes as a sustainable competitive advantage.

“In effect therefore, the larger role of Bajaj in the future of the KTM business offers potential to unlock a triad of opportunity covering global growth, brand elevation, and technology leadership,” the statement concluded.

With KTM’s creditors appeased, and the future trajectory of the brand secured, KTM chief executive officer Gottfried Neuemeister said he is thankful to see the brand brought back from the brink.

“Today we have been given the opportunity to continue the history of KTM,” he said.

“Together with our long-standing partner Bajaj, we were able to work out a strategy that will enable us to raise a further €600 million for our new start in addition to the €200 million already made available.

“The existing sites – in particular our main plant in Mattighofen/Munderfing – will remain the basis for our future success. This means that we will continue to be an important employer for the entire region.

“In view of this new, second opportunity, we at KTM feel deep gratitude and humility towards all those within and outside our group of companies who have made it possible.

“I would also like to take this opportunity to thank Stefan Pierer on behalf of all those who have accompanied us along the way. He laid the foundation for one of the world’s best-known motorcycle brands, which has a unique community.”