India's two-wheeler giant Bajaj Auto has announced that it will take control of the Austrian motorcycle company KTM through its Netherlands-based subsidiary, Bajaj Auto International Holdings BV (BAIHBV). This announcement comes shortly after Bajaj secured an unsecured loan of Rs 5,431.08 crore ($632 million) from JP Morgan Chase Bank, DBS Bank Ltd, and Citigroup Global Markets Asia Ltd.
In an exchange filing on Thursday, the company said it had arranged a debt funding package of €800 million (Rs 7,200 crore) to support the continuity of the KTM business by settling creditor dues under its approved debt restructuring plan, and to infuse fresh funds into the company for reviving operations and its working capital cycle.
“Of the total €800 million debt package, €200 million has already been infused into the company so far, and the remaining €600 million is now being provided,” the filing said. “This twin move—taking ownership (subject to regulatory approvals) and reducing debt by providing liquidity at a crucial stage—positions Bajaj Auto as a driving force in shaping the future of one of the world’s most admired high-performance motorcycle companies.”
KTM’s Financial Woes and Restructuring
Bajaj Auto co-owns the parent company of KTM, Pierer Mobility, alongside Austrian entrepreneur Stefan Pierer. KTM AG filed for insolvency last year after struggling with volatile demand during the Covid-19 pandemic, which led to excessive inventories.
In November 2024, KTM entered self-administration restructuring proceedings. Around 1,200 creditors filed claims totalling approximately €2.2 billion. A restructuring plan—offering a 30% cash settlement—was accepted in February by a majority of creditors at the Ried im Innkreis Regional Court. Under this plan, KTM was required to transfer €600 million to restructuring administrator Peter Vogl by 23 May.
The February court ruling mandated that KTM pay €600 million to creditors by the 23 May deadline, covering 30% of the outstanding debt. An additional €150 million is needed to maintain operations, bringing the total capital requirement to €750 million.
“On sighting the requisite liquidity in the escrow accounts and confirmation by the Administrator, the Court will confirm the restructuring plan by mid-June 2025, following a permissible objection period. Once confirmed, the quota payment will be released to creditors and the restructuring proceedings of KTM AG and its subsidiaries will conclude with legally binding orders,” Bajaj Auto said.
How Will KTM’s Ownership Change?
Under the existing structure, Bajaj Auto’s BAIHBV holds a 49.9% stake in its Austrian associate, Pierer Bajaj AG (PBAG). The remaining controlling stake in PBAG is held by Pierer Industrie AG, owned by entrepreneur Stefan Pierer.
PBAG holds about a 75% stake in its listed subsidiary, Pierer Mobility AG (PMAG). PMAG is the holding company of KTM AG, the leading manufacturer of off-road and street motorcycles under the KTM, Husqvarna, and GASGAS brands.
Before this transaction, Bajaj effectively held about a 37.5% indirect stake in PMAG/KTM through the above ownership structure.
The proposed equity acquisition by Bajaj—“after exploring various other alternatives until recently”—is a critical step towards realigning governance and restoring confidence among stakeholders, the Rajiv Bajaj-led company said.
Bajaj Auto plans to acquire full control of PBAG, although the change in ownership will only take effect after obtaining regulatory approvals.
In December 2024, a Pierer Group company signed a loan and share pledge agreement with Dabepo Holding GmbH for €80 million (including interest and costs).
Bajaj Auto, through BAIHBV, has assumed this obligation to prevent a potential foreclosure that could disrupt KTM’s restructuring. The loan is secured by assets from the Pierer Group, and the final payment for the shares is expected to fall within this amount.
As part of the ownership change, BAIHBV also intends to invoke the “restructuring privilege” under Austrian law, applicable to investments made for the benefit of a financially distressed company.
