Click it and Unblock the Notifications
Bajaj Auto Secures €566 Million Loan To Keep KTM Afloat - Last Minute Rescue
Indian two-wheeler manufacturer Bajaj Auto Ltd., in an exchange filing on Friday, stated that its European subsidiary-Bajaj Auto International Holdings BV ("Bajaj Auto BV"), Netherlands - had secured an unsecured €566 million financing facility from JP Morgan Chase, DBS Bank and Citigroup for strategic investments.
Bajaj Auto BV did not initially specify the use of proceeds, but the timing coincides with KTM AG's need to settle €544 million (approximately 30% of its total liabilities) by May 23, 2025, under a creditor-approved restructuring plan to avert bankruptcy.
After reports of the loan and its links to KTM's restructuring started popping up on the internet, Bajaj Auto clarified in a corporate filing dubbed "rumour verification" with the Bombay Stock Exchange confirmed the rumours were true stating, "In this regard, we would like to clarify that our wholly owned subsidiary, Bajaj Auto International Holdings BV, Netherlands ("Bajaj Auto BV"), is in negotiations and exploring various alternatives to participate in the restructuring of KTM AG, pursuant to a plan approved by its creditors.
Involvement by Bajaj Auto BV in the restructuring as well as arrangements in this behalf are being finalized and the Company will make necessary disclosures at the appropriate time in accordance with Regulation 30 of the Listing Regulations."
Why Has Bajaj Taken Out This Loan To Support KTM?
The move comes as no surprise. Bajaj Auto is a major stakeholder in KTM and has produced the Austrian marque's smaller-capacity motorcycles at its Chakan facility since 2007. After KTM filed for bankruptcy in November 2024, Bajaj Auto injected around €200 million to sustain operations and adhere to the court-approved restructuring plan adopted in February.
These financial infusions helped keep KTM in line with the restructuring plan approved in February and kept the lights on at the Mattighofen production facility. However, KTM's Austrian manufacturing facility stopped production on April 28th, due to supply disruptions brought about by fears that the firm would not be able to pay its suppliers for said parts.
What Does Bajaj's Last Minute Rescue Mean For KTM?
With Bajaj pulling out all the stops to help save KTM, the Austrian marque has another chance to get back on its feet. With this additional funding, KTM gets another opportunity to stabilise and fulfil its obligations to suppliers. The facility underscores Bajaj's commitment to its partner of nearly two decades, a partnership its MD Rajiv Bajaj, described in a recent interview as "not one we can easily let go of," while also talking about looking for a sustainable long‑term solution.
Bajaj first invested in KTM in 2007 when its wholly-owned European arm (the same part of the company that secured the loan) took a 14.5% stake in KTM AG. Over the years, Bajaj increased its investment in KTM and became the manufacturing partner for its 125(now discontinued and set to be replaced by a 160cc lineup), 200, 250 and 390 series of motorcycles.
In 2021, it swapped KTM shares to gain 49.9% of PTW AG (later renamed Pierer Bajaj AG), which holds 74.9% of Pierer Mobility AG - the parent company of KTM, Husqvarna, and GasGas, as well as the KTM MotoGP team.
What Comes Next?
Hopefully, the loan from Bajaj will mean that KTM will be able to keep running as it looks to increase production and pay off its debtors. Industry rumours suggest that BMW and other players are monitoring KTM's restructuring, potentially positioning themselves for a takeover. Should Bajaj further consolidate control by leveraging its newest investments, we could see the Austrian marque increase its focus toward the burgeoning Indian middleweight segment.
The firm has long talked about a new lineup powered by a 500cc, twin-cylinder engine that will be made in India for the world. This new engine is expected to be adapted from the firm's LC8c 799cc twin and is expected to power Duke, RC and Adventure bikes that are set to come out sometime soon (though, how soon has been in the rumour mill since 2018).
We now have to wait and see just what happens with KTM and its whole bankruptcy saga. Hopefully, things go well and we'll see KTM back to being its best self. Hopefully...
Continue with Google