Bajaj Auto comes to the rescue of insolvency-bound KTM

Bajaj Auto Limited, through its wholly-owned Netherlands-based subsidiary, Bajaj Auto International Holdings BV (BAIHBV), has made a critical intervention to prevent Austrian motorcycle manufacturer KTM AG and its subsidiaries from entering a full-blown insolvency process. This strategic move, announced on May 22, 2025, involves a substantial debt funding package of €600 million (equivalent to approximately Rs 5,820 crore at an assumed exchange rate of 1 Euro = Rs. 97). This new funding comes in addition to the €200 million already infused by BAIHBV, bringing the total debt package to €800 million.

The urgency of this financial injection stemmed from a critical deadline of May 23, 2025. KTM’s restructuring plan, which had been accepted by its creditors on February 25, 2025, mandated that a cash quota of 30% of their claims be deposited with the restructuring Administrator by this date. Failure to meet this deadline would have resulted in KTM being taken out of self-administration and irrevocably moved into an insolvency process under Austrian law.

To meet this obligation, BAIHBV has undertaken two key transactions:

• A secured term loan of €450 million (approximately Rs. 4,365 crore) is being provided to KTM AG via a Facility Agreement.
• BAIHBV is subscribing to convertible bonds of €150 million (approximately Rs. 1,455 crore) issued by Pierer Bajaj AG (PBAG). These funds from the convertible bonds will then be loaned by PBAG to Pierer Mobility AG (PMAG), which in turn will fund KTM AG to cover the remaining creditor’s quota and restart costs. These amounts will be paid into escrow accounts of the Administrator.

This move is part of Bajaj Auto’s broader strategy to take control of the KTM business. Bajaj Auto intends to acquire a sole controlling stake in PBAG, which will result in majority ownership of the global KTM business, pending necessary regulatory approvals. This transition aims to realign governance, restore confidence among stakeholders, facilitate operational restructuring, and create flexibility for potential partnerships. Bajaj Auto currently holds approximately 37.5% effective stake in PMAG/KTM through its existing shareholding structure.

KTM AG and its subsidiaries, KTM Components GmbH and KTM F&E GmbH, initiated a self-administrative restructuring process in November 2024 due to acute liquidity challenges, spiraling debt, and working capital constraints. Bajaj’s intervention is designed not only to address these immediate financial needs but also to position Bajaj Auto as a driving force in shaping the future of the high-performance motorcycle brand. Once regulatory approvals are secured, Bajaj is committed to revamping the governance framework, reconstituting the Board, initiating a turnaround program to restore momentum and competitive growth, and implementing measures to widen the existing joint development program. This strategic enhancement of Bajaj’s role in the KTM business is expected to unlock opportunities for global growth, brand elevation, and technology leadership.

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