21 May 2025

BAJAJ AUTO MAKES DECISIVE MOVE TO TAKE CHARGE OF REBUILDING KTM

Pune, May 21, 2025 – In a significant move underscoring its commitment to its long-term partnership with KTM and recognising the opportunity in the exciting world of premium/sports motorcycles given the brand’s preeminent position, Bajaj Auto Limited, through its wholly owned subsidiary Bajaj Auto International Holdings BV (BAIHBV), intends to take control of the KTM business that is headquartered in Austria, subject to necessary regulatory approvals.

With this action and post requisite approvals coming through, Bajaj will shift gears from hitherto being a dormant minority investor to a majority owner in the global KTM company, whilst it continues to accelerate the thriving KTM business that is run out of India under the joint development program, where it develops, makes and sells in India as well as exports to 80 countries across the KTM network.

Simultaneously, BAIHBV has arranged a debt funding package of €800 million to enable the continuity of the KTM business by paying off the approved quota to the creditors in furtherance of KTM’s debt restructuring with the approval of the competent Court in Austria and infusing funds into the company to revive its operations and working capital cycle. Of this total €800 million debt package, €200 million has already been infused into the company so far and the balance €600 million is being done now.

This twin move of taking ownership (subject to approvals) and paring down debt by providing liquidity at a crucial stage, positions Bajaj Auto as a driving force in shaping the future of one of world’s most admired high performance motorcycle companies.

Existing Structure

• Bajaj Auto Limited has a wholly owned subsidiary in Netherlands called Bajaj Auto International Holdings BV (BAIHBV).
• BAIHBV holds a 49.9% stake in its associate, i.e., Pierer Bajaj AG (PBAG) in Austria. The remaining controlling stake in PBAG is held by Pierer Industrie AG, owned by entrepreneur Stefan Pierer. • PBAG holds ~75% stake in its listed subsidiary, Pierer Mobility AG (PMAG).
• PMAG is the holding company of KTM AG (KTM Business), the leading manufacturer of offroad and street motorcycles marketed under the marquee brands of KTM, Husqvarna and GASGAS.
• Bajaj effectively holds ~37.5% in PMAG/KTM, through the above chain, prior to this transaction.

KTM’s Restructuring Process

In November 2024, KTM AG and its subsidiaries, KTM Components GmbH and KTM F&E GmbH entered into a self administrative restructuring process, prompted by acute liquidity challenges that could not service the spiralling debt and working capital constraints that stifled routine business operations.

Key milestones in the process include:

• On November 28, 2024, KTM AG applies for the initiation of judicial restructuring proceedings with self administration over the assets of KTM AG and its two subsidiaries with an aim to agree a reorganization plan with the creditors within 90 days.
• On February 25, 2025, the creditors accepted the restructuring plan submitted by KTM AG. This plan provided for creditors to receive a cash quota of 30% of their claims in the form of a one-time payment to be deposited with the restructuring Administrator by May 23, 2025.
• In the event that the liquidity is not made available to and presented before the Administrator/Court latest by May 23, 2025, as per the law in Austria, the three entities are taken out of self-administration and moved irrevocably into an insolvency process.
• On sighting of the requisite liquidity in the escrow accounts and confirmation by the Administrator, the Court will confirm the restructuring plan by mid-June 2025 after offering a permissible objection period, post which the quota payment will be released to the creditors and the restructuring proceedings of KTM AG and its subsidiaries will be concluded with legally binding orders.

The Current Transaction

To address the KTM business’ acute liquidity challenges and enable a structured revival of the brand that has a strong heritage and acclaimed position worldwide, Bajaj Auto outlines a set of strategic interventions.

The proposed equity acquisition by Bajaj of a controlling stake in PBAG and therefore, in PMAG/KTM (upon receipt of regulatory approvals) after exploring various other alternatives until recently, is a critical step in realigning governance to restore confidence among stakeholders, setting a path for operational restructuring of the business and creating flexibility for potential partnerships.

The debt package totalling €800 million seeks to address liquidity needs to meet creditor obligations pursuant to the approved restructuring plan and fund restart of operations.

A. Equity Ownership

Bajaj Auto intends to acquire a sole controlling stake in PBAG. The equity ownership realignment and change of control will, however, be brought into effect only after regulatory clearances.

A Pierer group company entered into Loan and Share Pledge Agreements with Dabepo Holding GmbH in December 2024 for an amount, which along with interest and costs adds up to €80 million. Bajaj through BAIHBV has taken over the commitment under the aforesaid Loan and Share Pledge Agreements from Dabepo Holding GmbH, to prevent the threatened foreclosure of this loan which could impede the planned restructuring and ramp up of the KTM business. This loan has been covered through security that has been provided by the Pierer Group. It is expected that the full consideration for the eventual share transfer will be settled within the range of this loan amount.

In connection with the planned change of control, BAIHBV intends to invoke the restructuring privilege provided for under the Austrian Takeover Act applicable to investments for the benefit of a distressed company.

A further intimation on the transfer of Pierer’s equity ownership and change of control will be made in the future once the necessary regulatory approvals are obtained.

B. Debt Package

1. €200 million cash already infused as shareholder debt to maintain continuity and revive operations
   1. Funded in four tranches of €50 million each via Convertible Bonds/Loans, this was deployed in a phased manner across FY24 and April-May 2025, reflecting Bajaj’s sustained support through the critical stage of keeping the KTM business going through the self-administration phase. b. Each transaction was executed under the oversight and legal framework that was set by the Administrator in Austria.
2. Fresh €600 million debt now to be provided to fund payment of creditors quota and associated costs
   1. €450 million as a secured term loan by BAIHBV to KTM AG
   2. €150 million of Convertible Bonds issued by PBAG and subscribed to by BAIHBV, that will be loaned by PBAG to PMAG, who in turn will eventually fund KTM AG to be used for the balance amount of the creditor’s quota and restart costs.
   3. The amounts will be paid into the escrow accounts of the Administrator to the extent of the amounts due for payment towards the creditors’ quota.

These were funded by bank loans that were raised directly by BAIHBV in the Netherlands and investments made out of internal accruals by Bajaj Auto into BAIHBV. Requisite intimations were filed with the Stock Exchanges from time to time.

Next Steps

The immediate next step is to secure binding restructuring orders from the Court in Austria to mark the end of the self-administration process and settle the creditors’ quota. Alongside, applications are being made to the Austrian Takeover Commission, Foreign Investment Control and Merger Control Authorities, as applicable for their approval. Till such time these are received, the current control setup shall standstill and prevail. Finally, after months of stoppage, the production of bikes and the supply of parts, garments and accessories to the markets will be started.

Following the receipt of requisite approvals, Bajaj is committed to –

1. Initiating a revamp of the governance framework including reconstituting the Board
2. Commencing the journey of turnaround – putting in place a program aimed at restoring momentum and competitive growth while driving the financial viability of the company
3. Implementing measures that widen the remit of the existing joint development program between the companies and pursuing synergistic opportunities in both the front end and back end
4. Exploring potential partnerships and collaborations to build sustainable competitive advantage and long term value creation

In effect therefore, the larger role of Bajaj in the future of the KTM business offers potential to unlock a triad of opportunity covering global growth, brand elevation, and technology leadership.

About Bajaj Auto Ltd:

With over 21 million motorcycles sold in over 100 countries, the Bajaj brand is truly “The World’s Favourite Indian." It is India’s No. 1 motorcycle exporter, with two out of three bikes exported internationally carrying a Bajaj badge. The company is also the world’s largest manufacturer of three-wheelers. Bajaj Auto is the first two-wheeler company in the world to have reached a market cap of INR one trillion and continues to be the world’s most valuable two-wheeler company. It has been delivering products that have best-in- class design and technology and are built on uncompromised quality for the past 75 years. The company’s unwavering commitment to new product initiatives has made it future ready.

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