The actual due diligence has not yet begun but KTM has already found discrepancies with what MV declared at the time of the agreement. With 15 million euro it would now control 32%.
Luca Martin and Verena Schneglberger-Grossmann join the field.
Perhaps you, readers, haven’t realised it, but the partnership between MV Agusta and KTM is not a commercial one but a takeover by KTM. The 25.1% of MV Agusta was only paid for 15 million euro, which, for the Austrians, means the factory was not worth much more, even before they looked into it. Now it is worth even less.
When they entered the company, the Austrians were reportedly disappointed and also discovered some things that left them with a sour taste. This is directly told by the production workers, who are, among other reasons, at home because the production is at a standstill. And many, at home, are in danger of staying there at all.
KTM’s percentage would have risen to 32% with the same amount paid, meaning these items, from the point of view of the inventory, the reality of what was found would not correspond to what was declared at the time of signing. Missing bikes, missing parts and so on. In short, quite a mess.
The risk is that the Austrians will eventually take away 100% of MV for less than 40 million compared to the 190 million invested by the Sardarov family in recent years, and this could happen even earlier than Misterhelmet reported, which set the timeline for late 2024.
Confirmed is Timur Sardarov, Rashid’s son, as CEO and managing director, he who puts up the money, or at least has put it up until now. His yacht is seized, the newspapers report, and the latest money for MV is said to be coming not from Europe but from the Caymans.
Returning to Timur, his three-year contract as managing director would be valued at 3.6 million euro, or 100 thousand euro per month, all with employees who have not taken their salaries since September, with 60 layoffs planned immediately and others in step 2. This agreement should be signed by November 15 because there are salaries to be paid and the money is not there. This is not to mention rumours of contribution irregularities for the last three years, so much so that the company is said to be without a DURC, the Italian certification of labour compliance, with arrears of about 12 million euro in unpaid contributions.
If this is true, it is quite strange that the judiciary has not yet taken an interest in the matter, given that a company in agreement, with still 8 million euro to pay to close it, could not afford irregularities of this kind.
What KTM would have discovered, even before starting the actual due diligence, would be a critical situation to say the least:
- 17 million euro await the suppliers
- 8 million euro, as mentioned, are needed to close the agreement, what the US would call Chapter Eleven
- 12 million euro are for unpaid contributions with possible penalties that may arrive
- 50 million could be added for a compensation demanded by Loncin for a default by MV relating to an unsuccessful partnership for the production of small motorbikes. These are not debts, but they are a risk that must still be budgeted for.
Also pending is the lawsuit with Giovanni Castiglioni for the use of the Cagiva brand, still at the preliminary stages, for which quite a long time is expected.
Castiglioni is likely to advance, these are the rumours with figures still to be ascertained, even 9 million euro between unpaid fees and royalties for some versions of the F4 dedicated to Claudio Castiglioni.
The sum of the numbers just listed makes almost 100 million.
It is easy to understand that the 15 million euro put up by KTM is a drop in the ocean and that MV’s liabilities and risks are far greater than both the 25.1% of the shares initially agreed and the 32% hypothetically reached these days. Doing rough maths, this is well beyond the value of the company.
There are also other situations that need to be quantified. We are talking about warehouse management costs and other related activities, including the production of the motorbikes. More money is needed for these activities because if you do not have motorbikes to deliver, you cannot sell them, or at least you could not.
Some rumours that deserve to be verified would report atypical behaviour on the part of MV, namely that of invoicing dealers for motorbikes that cannot be delivered. The invoices would however be passed on to the banks to be discounted by a certain percentage and then reversed to the dealers on the grounds that the motorbikes ordered would not be ready. This behaviour to be verified, if actually practised, would cause further shortfalls to be ascertained by Generalfinance, MV Agusta’s bank, because of the motorbikes sold which in fact are non-existent. Besides, as mentioned, production has been stopped from the first week of November 2022.
The paradox? Customers want MV Agustas but the bikes don’t exist. What will be sold in the US, Mexico and Canada sales network that KTM will take over, nobody knows for certain.
KTM and the new board
The first moves by Pierer and his team were surely imminent.
At the helm of MV, Timur Sardarov has been confirmed, while he is to be joined by president and perhaps also guarantor, banker Massimo Ponzellini, who has a prestigious curriculum of public and private appointments. However, two people would be added to the board by KTM, with the idea of replacing Sardarov as soon as the Austrians gain control of the company, therefore well before his contract expires.
The first figure would be Luca Martin, currently CEO of KTM Asia. It would be him who would be destined to lead MV Agusta once the majority stake is acquired.
The second figure, on the other hand, would be Verena Schneglberger-Grossmann, currently VP of Legal at Pierer Mobility. She is the head of KTM’s lawyers, in other words, the person who, every time she finds a gap, will ask to raise the controlling percentage of KTM without adding a euro.
In the meantime, MV Agusta will no longer be a real company but will only have production because purchasing, sales and everything else will be KTM’s, which will supply the parts to MV and buy the product. CRC, which does R&D for MV, will also close and be absorbed by KISKA.
Sardarov’s counter-attack
In a recent interview, Timur Sardarov is said to have stated that he is firmly at the helm of the company and has no intention of reducing his stake or selling. It is possible that the intention is to try to let some time pass while the family funds (which some say are blocked) find their way to Schiranna. In that case, the Sardarov family could slow down the rise of KTM by injecting money to defend their shares, but they might not be able to stop it.
In racing, what happens?
As far as Supersport is concerned, linked to the bikes for sale, Quadranti’s contract with Reparto Corse, which is still valid for another year, would leave things as they are until at least the end of 2023.
In Moto2, on the other hand, it is clear that for KTM, which fields Kalex bikes, it makes no sense to keep an MV that is not MV. Giovanni Cuzari would not only have paid himself completely for the F2 project over the years (which would therefore be his) but he would not receive a euro from Schiranna. On the contrary, recently he would have been asked for a fee of 200 thousand euro just to be able to use the Varese brand. This would be pushing him towards looking for other partners. Whether KTM will want to field another MV-branded Kalex is unknown, but it is certainly not something to get excited about.
As for MotoGP, Pierer has already denied an MV in the premier class but has not denied another KTM re-branded as in the GASGAS case. And even here, there is no tearing one’s hair out if KTM wants to do as Ducati does but field six bikes under three different names, although MV Agusta would be the only brand that would make sense. The only one who would be happy would be the Ezpeleta family.
Super Gossip Livio Suppo!
Those who have come this far, after reading serious things, deserve a super gossip closing. Some time ago, Livio Suppo was allegedly spotted at MV Agusta. Some say he was there to talk about electric bikes (Suppo owns Thok, which also supplies bikes to Ducati), while others claim he was there to reorganise the Reparto Corse, if not even to bring Suzuki material coming out of MotoGP to Schiranna. Even if at the moment a real racing department and there are other priorities, the hypothesis remains fascinating.
Video with English subtitles!
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