Motorcycle maker KTM accused of 'delaying tactics' ahead of vote

VIENNA: A creditor opposing the debt restructuring plan of Austrian motorcycle manufacturer KTM AG is accusing the company of "delaying tactics” to avoid addressing an alternative proposal.

US hedge fund Whitebox Advisors LLC, which holds KTM promissory notes known as Schuldschein, claimed the company has failed to seek negotiations or respond to requests for information in a letter sent to management and seen by Bloomberg.

Creditors are due to vote on the restructuring plan on Feb 25.

The Austrian motorcycle company, which is backed by Austrian entrepreneur Stefan Pierer and Indian automaker Bajaj auto, filed for insolvency proceedings in November after suffering from a slump in sales and an inventory backlog.

The company is a subsidiary of Pierer Mobility AG.

Representatives for KTM and Whitebox declined to comment. KTM’s insolvency adviser didn’t respond to an email seeking comment.

In January, Whitebox proposed a restructuring plan that would offer at least 45% recovery for lenders, in comparison to the 30% envisaged by the company, Bloomberg previously reported.

Under the Whitebox proposal, all lenders would have the option to provide new financing for KTM, and existing shareholders would be able to participate in a capital increase.

Whitebox also said it has interest from potential equity investors who could provide capital in the event the existing shareholders are not supportive, according to the letter.

In the company plan, instead, Pierer Mobility would be solely responsible to raise up to €900 million (RM4.2bil) of fresh funds to help put the company back on track.

Whitebox has been appealing to other Schuldschein lenders and claims it has the support of a "large” number of other investors, it said in the letter.

Without engagement, Whitebox plans to vote down the restructuring plan proposed by the company, according to the letter.

A rejection could put KTM into liquidation or another insolvency process where the debtor loses control.

The fund’s efforts are separate from another bank lender group advised by Houlihan Lokey.