US activist hedge fund Whitebox Advisors has intensified its opposition to the debt restructuring plan proposed by Austrian motorcycle maker KTM AG, accusing the company of employing “delaying tactics” to sideline its alternative proposal, according to a report by Bloomberg.
The dispute comes as creditors prepare to vote on KTM’s plan on 25 February, a critical step for the company following its insolvency filing in November.
Whitebox, a creditor holding KTM’s Schuldschein promissory notes, has presented a competing restructuring proposal promising at least a 45% recovery rate for lenders, significantly higher than the 30% outlined in KTM’s plan. The hedge fund’s proposal includes an option for lenders to provide fresh financing and invites existing shareholders to participate in a capital increase. Additionally, Whitebox claims to have interest from potential equity investors willing to inject capital if current shareholders decline to participate.
In contrast, KTM’s restructuring plan relies solely on its parent company, Pierer Mobility, to raise €900m ($930m) to stabilise the business.
Whitebox has criticised KTM for failing to engage in negotiations or respond to requests for information, accusing the company of delaying tactics to avoid addressing the alternative plan. In a letter sent to KTM’s management and seen by Bloomberg, Whitebox urged the company to consider its proposal, which it claims offers a more favourable outcome for creditors.
Without meaningful engagement, Whitebox plans to vote against KTM’s restructuring proposal. A rejection could push the motorcycle manufacturer into liquidation or a different insolvency process where the debtor loses control.
The hedge fund has been rallying support among other Schuldschein lenders, asserting that it has the backing of a “large” number of investors. Whitebox’s efforts are separate from those of another lender group advised by Houlihan Lokey.
