Pierer Mobility Group has announced that KTM is entering a voluntary restructuring process to avoid bankruptcy amid the company’s ongoing financial problems.

KTM’s financial problems have led to a series of drastic measures in recent months, with its board of directors reduced from six to two and several rounds of staff layoffs.

In recent weeks it was reported that KTM would lay off another 300 employees, while all production would cease in January and February.

This comes after its share price has plummeted 90% since its peak in February 2022, and the company does not expect to obtain the necessary financing to cover the “triple-digit million” figure it needs.

It will now file for insolvency in Austria, and the KTM brand will be spun off and restructured in an attempt to avoid bankruptcy.

The full statement reads: “KTM AG, a wholly-owned subsidiary of Pierer Mobility AG, will apply for the initiation of a judicial restructuring procedure with self-administration (Sanierungsverfahren unter Eigenverwaltung) on ​​November 29, 2024.

“KTM AG’s financing needs currently amount to three-digit million. Management does not expect to be able to secure the necessary interim financing in time.

“The Executive Board of KTM AG has therefore decided today to file an application for the initiation of judicial restructuring proceedings with self-administration of the assets of KTM AG and its subsidiaries KTM Components GmbH and KTM F&E GmbH.

“The procedure offers the possibility of continuing to manage the assets under control and of reorganizing the KTM Group independently. The other subsidiaries of KTM AG, in particular all sales companies, are not affected.

“The aim of the procedure is to agree with the creditors on a reorganisation plan within 90 days. The restructuring of the group should not only ensure the long-term continuity of the KTM Group, but also create the basis for emerging stronger from the procedure.

“A resizing of production should lead to a gradual adjustment of excess stock at KTM and its dealers over the next two years.

“This will lead to a reduction in operating efficiency at the Austrian plants of more than 1 billion euros in 2025 and 2026.

“The restructuring process will result in potential additional losses, for example due to extraordinary expenses such as necessary amortizations (e.g. for capitalized development costs) and staff reduction costs, as well as the shortfall in fixed costs due to lower operating performance and other costs arising from the restructuring process.

“Consequently, for the current fiscal year 2024, the company expects a negative annual net result in the very high three-digit million range due to the reasons mentioned above.”

KTM CEO Pierer added: “Over the past three decades, we have grown to become the largest motorcycle manufacturer in Europe.

“We inspire millions of motorcyclists around the world with our products. Now we are making a pit stop for the future. The KTM brand is my life’s work and I will fight for it.”

KTM has insisted over the past week that its MotoGP project will continue as normal in 2025 despite the company’s financial problems.