More quota demanded

Resistance to rescue plan for KTM

The KTM insolvency is a case for the Ried Regional Court

(Bild: Krone KREATIV/EPA, Daniel Scharinger)

While slight optimism was spread on Friday in the course of creditor meetings surrounding the bankruptcy of KTM and its subsidiaries, there is apparently also resistance to the restructuring plans of the insolvent Upper Austrian motorcycle manufacturer.

A group of lenders wants more money back, is resisting the planned restructuring and, according to financial news agency Bloomberg, is proposing its own plan for better creditor prospects.

A group of Schuldschein creditors of the KTM companies with billions in debt, led by the US hedge fund Whitebox Advisors, wants to offer the lenders more than the 30 percent envisaged in the company's own proposal, according to a presentation by the lenders. 30 percent is the minimum that KTM must offer in its type of insolvency proceedings.

Silence among those involved
A representative of Whitebox declined to comment. A spokesperson for KTM's parent company Pierer Mobility did not respond to emails and calls, according to the agency. A representative of the company that prepared the presentation - Perella Weinberg Partners - also did not respond.

"Significant discounts"
The creditor group argues that the additional capital demanded by Pierer Mobility for KTM in the spirit of the turnaround would be at the expense of the lenders. These would have to "accept considerable discounts". Existing shareholders such as Pierer Mobility, owned by industrialist Stefan Pierer, would be able to "buy into the company at a massive discount", according to the presentation.

Alternative plan
According to the alternative plan of the critical lenders, the company's existing equity would be written down to zero. All creditors would be offered the opportunity to provide new financing themselves, although the creditor group is prepared to secure the necessary financing, according to the presentation.

"Buy off" up to 70 percent
The providers of the new financing would receive 30 percent of the company's equity, while 70 percent would go to reinstated creditors, according to the presentation. Existing shareholders would then have the opportunity to buy up to 70 percent of the equity from the reinstated creditors. Even creditors who decide not to participate in the new financing would receive "significantly better recovery rates".

Decisive meeting on February 25
On Friday, creditors registered claims amounting to around 2.2 billion euros, whereby the insolvency administrator has so far recognized around 1.7 billion euros, according to AKV. The restructuring plan - i.e. the exact future of KTM - will be voted on by the creditors on February 25.