Pierer Mobility AG experienced a significant drop in its share value following the announcement that its subsidiary, KTM AG, is initiating a self-administered insolvency process in Austria.
The motorcycle manufacturer disclosed that it is grappling with a substantial financing shortfall, described as a "very high three-digit million euro" amount. The company is now working to negotiate a reorganization plan with its creditors within a 90-day timeframe.
As part of the restructuring efforts, Pierer Mobility outlined plans for KTM that involve scaling back production and gradually reducing surplus inventory. These measures aim to diminish the output of the company's Austrian facilities by over €1 billion in the coming two years.
The impact on Pierer Mobility's stock was severe, with a 45% decline to 6.9 Swiss francs, equivalent to $7.8. This marked the steepest single-day decrease in the company’s history, exacerbating its year-to-date losses to 84%.
The financial difficulties faced by KTM are part of a broader industrial crisis across Europe, coupled with a decrease in the demand for motorcycles. Pierer Industrie AG, the parent company of Pierer Mobility, which is co-owned by Stefan Pierer and Bajaj Auto (NS:BAJA) Ltd. of India, has been seeking to restructure its debt.
On Monday, the company approached its creditors with a request to prolong the maturity of nearly €250 million ($262 million) of its liabilities.
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