Bajaj Auto Raises ₹5,399 Crore Loan For KTM Buyout?

Bajaj Auto Ltd has raised a €566 million (₹5,399 crore)  loan which is likely to be used to fund KTM AG's insolvency plan via its European arm. The loan amount has been secured from JP Morgan Chase & Co., DBS Bank Ltd., and Citigroup Inc., according to a regulatory filing with the Bombay Stock Exchange (BSE). The timing of the loan indicates that this amount might be pumped to save KTM from insolvency, the deadline for which is set on May 23. As part of the restructuring process for the Austrian brand, it has to deposit €544 million (₹5,189 crore) with its creditors which is a 70 per cent cut compared to its debt amount. 

India’s Bajaj Auto and Austrian entrepreneur Stefan Pierer jointly control Pierer Mobility, which is the parent company of KTM. Bajaj already has 49.9% stake in the company and Rajiv Bajaj had expressed his desire to safeguard KTM given its popularity in the country and profitability aspect for Bajaj Auto. Bajaj had earlier invested €50 million (₹476.9 crore)  in KTM so as to ensure that production doesn’t halt at the Mattighofen plant in Austria. If Bajaj Auto goes ahead with the investment, then it will hold a controlling stake in the Austrian brand. 

The above would also end speculation of BMW Motorrad and CF Moto planning to buy out KTM. However, we will wait for an official quote from Bajaj Auto or KTM about the above investment, which might happen on May 19.