KTM launches legal dispute with €80 million investor

Former KTM CEO Stefan Pierer is suing Stephan Zochling after the latter offered his pledged shares for sale as part of a fallout over an €80 million loan.

It has been a turbulent half-year for the Austrian manufacturer, as it has navigated its way through a major financial crisis.

KTM passed numerous court hurdles to have its restructuring plan approved by creditors, which it hopes will safeguard the long-term future of the company.

The brand must pay back 30% of the over €2 billion in debts it has accrued, which totals around €600 million to be repaid to creditors by 23 May.

Reports in Austria of another KTM problem

However, KTM faces a further headache as a legal challenge has been initiated by former CEO Stefan Pierer - who stepped down from his role earlier this year - against chairman of the supervisory board and a board of management of Pierer Industrie AG Stephan Zochling over an €80 million loan.

According to Austrian newspaper Der Standard, Zochling - through his Dabepo Holding AG - loaned a subsidiary of Pierer Mobility Group €80 million.

As part of this load, Pierer Industrie AG pledged shares of this loan value to Zochling’s Dabepo as collateral, with the loan to be repaid by the end of June.

But Zochling believes there has been a breach of contract because Pierer didn’t inform KTM co-owner Bajaj about the same offer.

Zochling is now offering these shares for sale back to Pierer Industrie, leading Pierer to file a lawsuit with the Vienna Commercial Court.

He argues the loan repayment is not due yet, so Zochling is not entitled to sell those shares.

It’s unclear how this will affect KTM’s push to find the €600 million investment it needs to repay its creditors.