KTM's financial woes

The two metro Atlanta family owned dealerships I buy from have been advertising their heavily discounted bikes on Cycle Trader nation-wide. Some of the cheapest prices I've seen.

Why I have bought two in the last seven months. Contemplating buying a third,

 

Got a link?

 

You looking to go full Omar on Wanker's stash house?

 

Alternatively,... you might say:

 

Ask for Mark
https://www.gainesvillemotorsports....1&sortby=Make|asc&customSearch=2024 Husqvarna
Former fast guy Cam Roos the parts manager here, but still recovering currently.

Call Bobby for their best price and tell him Ken referred you.
https://www.woolyscycles.com/husqva...e=husqvarna#page=xNewInventory&make=husqvarna

 

So I looked at one if their subs today (software) pretty hard and found they have $3.3mm in debt with a valuation of $1mm. This sub is 100% owned by Pierer Mobility (PM from here on). 80% of their business comes from PM and majority of that business is the KTM company. They are filing bankruptcy they cannot pay the debt or their employees.

I looked at another one (software e-commerce) pretty hard as well, they have over $5mm in debt and 100% owned by PM. 100% of their business comes from the KTM company. They cannot pay the debt and can not pay the employees.

So between the two entities they have a tic over $8mm in debt. Now I am no brilliant scientist, but how does a company get into $3mm and $5mm in debt just doing software and ecommerce with only one customer?

Why did KTM choose to outsource all this development? Where did the money go? Was KTM company paying big bills to the software companies and then the software company was kicking money up and around to PM? Did the software companies take out big loans to do development and then plan on sticking it to the banks and then the code goes to KTM company? They are offering .20 cents on the dollar to the creditors according to the filing.

So I wonder if I could structure something like this? Start 5 companies loan a bunch of money then file insolvency and move the code to the one that survives, seems like a great way to get a free company.

 

Shell games.

 

I now know more about insolvency in Austria than I do in the USA.
1) Self Administered VS Non Self Administered. -- Self in short means that the company cannot pay their bills and that the current directors are going to get their way out of this. Non Self means I will let the lawyers handle it. They have to file proof with the court that they cannot pay their bills.
2) Self = .30 cents on the dollar within two year due to the creditors
3) Non Self = .20 cents on the dollar within two years due to the creditors

Now here is the wacky part. This is NOT bankruptcy it is the start of a negotiation. The will get all the creditors in the room for a vote. If 51% of the crediting companies and 51% of the dollar figure of the outstanding debt agree to the cents on the dollar offers than BAM it all goes away and the company can continue. If they do not get a 51% majority in both areas than it goes to bankruptcy and liquidatioin.

So say the have 100 creditors representing 100 Million dollars
They need 51 creditors to agree to the terms and those 51 creditors must make up $50,000,001 dollars, one dollar over the 1/2 way mark of the debt. If those 51 creditors only make up 50mm dollars or less than they need to add a creditors to the agreement side to get the dollar amount above 50mm dollars even.

So, PM can keep control if he can find stop gap funding and the creditors agree, the creditors will probably agree to the terms if they feel like they can get more money by riding it out for 2 years VS complete liquidation of the assets.

 

Wow, fortunately I know nothing about bankruptcy. I didn’t realize there such cut and dried rules like that. Thank you for explaining that in here.

Before turning blue collar and getting into forklifts, I was in software for 20 years. I’m with you, generally there is so much money coming in with software, it’s hard to believe they were that far into debt. It feels like PM was playing some games here.

 

Meanwhile, Beeb members have their credit cards out and shouting "C'mon, Liquidation! Daddy needs some new WHEELS!"



Seriously, though, you have to admire the Austrians: That procedure is pretty cut and dried.

I predict that PM won't let it get that far, they will entice investment because that's what they do. The workers won't get paid fully but most of them will have jobs, at least until the new investors finds a cheaper way.

-T

 

What does company A actually do? Manage the KTM web sites? Internal systems like HR/inventory/etc?

All the bike firmware must be in-house.

It's probably not hard. The full rate of a decent developer can easily be $300k/yr. If you're talking about Pierer Innovation specifically, they have 33 employees. I would call them more than software house, though a lot of vague hand-waving on their web site. Another, Avocodo, seems to have 123 employees ('Experts').

 

Well, the Supercross teams are on their way to Anaheim this morning

 

I am not sure of the entire scope of the development, but yes some of it is KTMDealer.net

I don't know where you are getting 300k per year that's double what I see here for 20 year guys...

 

They just announced the availability of the 2025 Duke 790. And also where it is made: China.

I'm guessing those workers are still there...

 

haven't the 790's been China made for a couple years?

 

I assume you're talking about what 20 year guys get paid. What they cost is different. $200k/yr salary is not outrageous (or even high, depending on the exact specialty) for someone with 20yrs experience.

TBF, there's a huge range from 'makes pretty web sites' to 'expert in GPU programming'.

 

Assuming they continue with last years build locations, yes.

https://www.ktm.com/en-int/production-facility.html

 

That's what I've heard - don't remember KTM stating that on the model page before.

 

I really don't care that much where they're made... as long as they don't use dairy products to make the cams

 

supposedly the China ones aren't effected