Harley-Davidson Achieves Milestone in Strategic Partnership with KKR and PIMCO with Completion of Sale of Residual Interests in Securitized Consumer Loan Receivables

Rhea-AI Summary

Harley-Davidson (NYSE:HOG) has completed a significant milestone in its strategic partnership with KKR and PIMCO, selling 95% of its residual interests in securitized consumer loan receivables. The sale generated over $230 million in proceeds at a premium to par value, representing approximately $2 billion in retail loan receivables and $1.8 billion in related debt as of June 30, 2025.

The transaction is part of a larger strategic initiative to transform Harley-Davidson Financial Services (HDFS) into a capital-light financing business. The company expects to complete the remaining aspects, including the sale of 4.9% common equity interests to each partner at a $1.8 billion valuation, by the end of October 2025. Once completed, KKR and PIMCO will begin acquiring new consumer retail loan receivables originated by HDFS.

Positive

• None.

Negative

• Reduction in direct control over consumer loan receivables portfolio
• Dependence on KKR and PIMCO for future loan acquisitions

Insights

Financial Restructuring Expert

HOG's deal with KKR/PIMCO transforms HDFS into a capital-light model, removing $1.8B debt while generating $230M+ in proceeds.

Harley-Davidson has reached a significant milestone in its strategic financial restructuring by completing the sale of 95% of its residual interests in securitized consumer loan receivables to KKR and PIMCO. This transaction generated $230 million in proceeds at a premium to par value, while removing approximately $1.8 billion in debt from HOG's balance sheet.

The transaction represents a fundamental shift in Harley-Davidson Financial Services' business model, transforming it from a capital-intensive financing arm into a capital-light operation. Under this new structure, HDFS will continue to originate loans but will sell them to KKR and PIMCO rather than holding them on its balance sheet. This effectively transfers the financial risk associated with these loans while allowing HDFS to maintain its strategic role in supporting motorcycle sales.

The deal's structure is particularly notable as it allows Harley to maintain origination and servicing capabilities—preserving the customer relationship—while freeing up substantial capital. The $2 billion in loan receivables and $1.8 billion in related debt being removed represents a substantial deleveraging of HOG's balance sheet. The $230 million in proceeds exceeding par value demonstrates strong investor confidence in the quality of Harley's loan portfolio.

The partnership still has pending components, including the sale of 4.9% common equity interests to each partner at a $1.8 billion valuation, expected to close by October. Once complete, this strategic shift will allow Harley to focus capital on its core manufacturing operations while maintaining the financing capability that drives motorcycle sales—essentially enjoying the benefits of a captive finance arm without the capital requirements.

Represents an important step in the recently announced strategic partnership with KKR and PIMCO to transform Harley-Davidson Financial Services (HDFS) into a capital-light and derisked business that will continue to originate and service both new and existing retail loans

Generates proceeds of more than $230 million through sale of residual interests in certain securitized consumer loan receivables at a premium to par

Residual interests sold represented aggregate retail loan receivables of approximately $2 billion and related debt of approximately $1.8 billion at June 30, 2025

MILWAUKEE, Aug. 25, 2025 /PRNewswire/ -- Harley-Davidson, Inc. (the "Company" or "Harley-Davidson") (NYSE: HOG) today announced the completion of the sale of its residual interests in securitized consumer loan receivables, marking a milestone in its strategic partnership with KKR, a leading global investment firm, and PIMCO, a global leader in active fixed income with expertise across public and private markets. This strategic partnership transforms HDFS into a capital-light financing business through the sale of existing and future retail loans while maintaining its strategic value to Harley-Davidson, its dealers, customers and investors.

Strategic Partnership Transaction Update

• HDFS has sold 95% of the residual interests in certain securitized consumer loan receivables to investment vehicles managed by KKR and PIMCO at a premium to par value for gross proceeds of more than $230 million.
• Residual interests sold represented aggregate retail loan receivables of approximately $2 billion and related debt of approximately $1.8 billion at June 30, 2025.
• HDFS is targeting completion of the remaining aspects of the transaction, including the sale of 4.9% common equity interests at an agreed $1.8 billion valuation to each partner, and the existing consumer retail loan receivables by the end of October. Upon completion of the transaction, investment vehicles managed by KKR and PIMCO will begin acquiring new consumer retail loan receivables originated by HDFS.

Management Commentary

"Since we announced our strategic partnership with KKR and PIMCO earlier this quarter, we have made excellent progress on our path to completing the transaction, and we are pleased to have achieved this major milestone with our partners so quickly," said Harley-Davidson Chairman, President, and CEO Jochen Zeitz. "Completing this step eliminates approximately $2 billion in variable interest entities and $1.8 billion of debt from our balance sheet, while generating more than $230 million of proceeds that we plan to use to support the capital allocation priorities we set forth when we announced the transaction. We are on track to complete the transaction as planned and begin the next phase of our partnership, all while continuing to deliver outstanding service levels for our dealers and customers. This transaction delivers benefits to all of Harley-Davidson's stakeholders and marks the beginning of an exciting new chapter for HDFS."

About Harley-Davidson

Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services. Our vision: Building our legend and leading our industry through innovation, evolution and emotion. Our mission: More than building machines, we stand for the timeless pursuit of adventure. Freedom for the soul. Our ambition is to maintain our place as the most desirable motorcycle brand in the world. Since 1903, Harley-Davidson has defined motorcycle culture by delivering a motorcycle lifestyle with distinctive and customizable motorcycles, experiences, motorcycle accessories, riding gear and apparel. Harley-Davidson Financial Services provides financing, insurance and other programs to help get riders on the road. Harley-Davidson also has a controlling interest in LiveWire Group, Inc., the first publicly traded all-electric motorcycle company in the United States.

Cautionary Note Regarding Forward-Looking Statements

The Company intends that certain matters discussed in this press release are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such by reference to this footnote or because the context of the statement will include words such as the Company "believes," "anticipates," "expects," "plans," "projects," "may," "will," "estimates," "targets," "intends," "forecasts," "seeks," "sees," "should," "feels," "commits," "assumes," "envisions," or words of similar meaning. Similarly, statements that describe or refer to future expectations, future plans, strategies, objectives, outlooks, targets, guidance, commitments or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, unfavorably or favorably, from those anticipated as of the date of this press release. Certain of such risks and uncertainties are described below. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this press release are only made as of the date of this press release, and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Important factors that could affect future results and cause those results to differ materially from those expressed in the forward-looking statements include, among others, the Company's ability to: (a) execute its business plans and strategies, including without limitation the Hardwire strategic plan, each of the pillars, and the evolution of LiveWire as a standalone brand; (b) manage supply chain and logistics issues, including without limitation quality issues, unexpected interruptions or price increases caused by supplier volatility, raw material shortages, inflation, war or other hostilities, including the conflict in Ukraine, or natural disasters and longer shipping times and increased logistics costs; (c) manage and predict the impact that new, reinstated or adjusted tariffs may have on the Company's ability to sell products domestically and internationally, and the cost of raw materials and components, including tariffs recently imposed or that may be imposed by the U.S. on foreign goods or rebalancing or other tariffs recently imposed or that may be imposed by foreign countries on U.S. goods; (d) accurately analyze, predict and react to changing market conditions, interest rates, and geopolitical environments, and successfully adjust to shifting global consumer needs and interests; (e) accurately predict the margins of its segments in light of, among other things, tariffs, rebalancing trade measures, inflation, foreign currency exchange rates, the cost associated with product development initiatives and the Company's complex global supply chain; (f) maintain and enhance the value of the Harley-Davidson brand, including detecting and mitigating or remediating the impact of activist collective actions, such as calls for boycotts and other brand-damaging behaviors that could harm the Company's brand or business; (g) manage through changes in general economic and business conditions, including changing capital, credit and retail markets, and the changing domestic and international political environments, including as a result of the conflict in Ukraine; (h) successfully access the capital and/or credit markets on terms that are acceptable to the Company and within its expectations; (i) successfully carry out its global manufacturing and assembly operations; (j) develop and introduce products, services and experiences on a timely basis that the market accepts, that enable the Company to generate desired sales levels and that provide the desired financial returns, including successfully implementing and executing plans to strengthen and grow its leadership position in Grand American Touring, large Cruiser and Trike, and grow its complementary businesses; (k) perform in a manner that enables the Company to benefit from market opportunities while competing against existing and new competitors; (l) manage the impact that prices for and supply of used motorcycles may have on its business, including on retail sales of new motorcycles; (m) prevent, detect and remediate any issues with its motorcycles, or any issues associated with the manufacturing processes to avoid delays in new model launches, recall campaigns, regulatory agency investigations, increased warranty costs or litigation and adverse effects on its reputation and brand strength, and carry out any product programs or recalls within expected costs and timing; (n) successfully manage and reduce costs throughout the business; (o) continue to develop the capabilities of its distributors and dealers, effectively implement changes relating to its dealers and distribution methods, including the Company's dealer footprint, and manage the risks that its dealers may have difficulty obtaining capital and managing through changing economic conditions and consumer demand; (p) realize the expected business benefits from LiveWire operating as a separate public company, which may be affected by, among other things: (i) the ability of LiveWire to execute its plans to develop, produce, market and sell its electric vehicles; (ii) the demand for and consumer willingness to adopt two- and three-wheeled electric vehicles; and (iii) other risks and uncertainties indicated in documents filed with the SEC by the Company or LiveWire Group, Inc., including those risks and uncertainties noted in Risk Factors under Item 1.A of LiveWire Group Inc.'s most recent Annual Report on Form 10-K; (q) manage the quality and regulatory non-compliance issues relating to the brake hose assemblies provided to the Company by Proterial Cable America, Inc. in a manner that avoids future quality or non-compliance issues and additional costs or recall expenses that are material; (r) maintain a productive relationship with Hero MotoCorp as a distributor and licensee of the Harley-Davidson brand name; (s) successfully maintain or achieve a manner in which to sell motorcycles in Europe, China, and the Company's Association of Southeast Asian Nations (ASEAN) countries that does not subject its motorcycles to incremental tariffs; (t) manage its Thailand corporate and manufacturing operation in a manner that allows the Company to avail itself of preferential free trade agreements and duty rates, and sufficiently lower prices of its motorcycles in certain markets; (u) retain and attract talented employees and leadership and qualified and experienced independent directors for its Board of Directors, eliminate personnel duplication, inefficiencies and complexity throughout the organization, and successfully complete transitions of executives, including the Company's upcoming CEO transition; (v) accurately estimate and adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices; (w) manage the credit quality, the loan servicing and collection activities, and the recovery rates of Harley-Davidson Financial Services' loan portfolio; (x) prevent a ransomware attack or cybersecurity incidents and data privacy breaches and respond to related evolving regulatory requirements; (y) adjust to tax reform, healthcare inflation and reform and pension reform, and successfully estimate the impact of any such reform on the Company's business; (z) manage through the effects inconsistent and unpredictable weather patterns may have on retail sales of motorcycles; (aa) implement and manage enterprise-wide information technology systems, including systems at its manufacturing facilities; (bb) manage changes, prepare for, and respond to evolving requirements in legislative and regulatory environments related to its products, services and operations, including increased environmental, safety, emissions or other regulations; (cc) manage its exposure to product liability claims in a manner that avoids or successfully mitigates the impact of substantial jury verdicts and manage exposure in commercial or contractual disputes; (dd) continue to manage the relationships and agreements that the Company has with its labor unions to help drive long-term competitiveness; (ee) close third-party investment(s) in HDFS by KKR and PIMCO in a manner consistent with the Company's objectives and that does not adversely affect its business; (ff) manage risks related to outsourced functions and use of artificial intelligence; (gg) achieve anticipated results with respect to the Company's preowned motorcycle program, Harley-Davidson Certified, the Company's H-D1 Marketplace, and Apparel and Licensing; (hh) optimize capital allocation in light of the Company's capital allocation priorities; (ii) manage the Company's share repurchase strategy; and (jj) manage issues related to climate change and related regulations.

The Company's ability to sell its motorcycles and related products and services and to meet its financial expectations also depends on the ability of the Company's dealers to sell its motorcycles and related products and services to retail customers. The Company depends on the capability and financial capacity of its dealers to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company. In addition, the Company's dealers and distributors may experience difficulties in operating their businesses and selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions, or other factors.

HDFS' retail credit losses have normalized in recent quarters to higher levels after a period of historically low levels of credit losses. Further, the Company believes that HDFS's retail credit losses will continue to change over time due to changing consumer credit behavior, macroeconomic conditions, including the impact of inflation and HDFS's efforts to increase prudently structured loan approvals to sub-prime borrowers. In addition, HDFS's efforts to adjust underwriting criteria based on market and economic conditions and the actions that the Company has taken and could take that impact motorcycle values may impact HDFS's retail credit losses.

The Company's operations, demand for its products, and its liquidity could be adversely impacted by changes in tariffs, inflation, work stoppages, facility closures, strikes, natural causes, widespread infectious disease, terrorism, war or other hostilities, including the conflict in Ukraine, or other factors. Refer to Risk Factors under Item 1.A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 26, 2025 and applicable updates under Item 1.A of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 filed with the SEC on August 06, 2025 for a discussion of additional risk factors and a more complete discussion of some of the cautionary statements noted above.

About KKR
KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR's insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR's investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR's website at www.kkr.com. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group's website at www.globalatlantic.com. 

About PIMCO
PIMCO is a global leader in active fixed income with deep expertise across public and private markets. We invest our clients' capital across a range of fixed income and credit opportunities, drawing upon our decades of experience navigating complex debt markets. Our flexible capital base and deep relationships with issuers have helped us become one of the world's largest providers of traditional and nontraditional solutions for companies that need financing and investors who seek strong risk-adjusted returns.

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SOURCE Harley-Davidson, Inc.

FAQ

What is the value of Harley-Davidson's deal with KKR and PIMCO in 2025?

The deal involves the sale of residual interests representing $2 billion in retail loan receivables and $1.8 billion in related debt, generating over $230 million in proceeds. The partnership values HDFS at $1.8 billion.

How will the KKR and PIMCO partnership affect Harley-Davidson's balance sheet?

The partnership will eliminate approximately $2 billion in variable interest entities and $1.8 billion of debt from Harley-Davidson's balance sheet, transforming HDFS into a capital-light financing business.

What percentage of residual interests is Harley-Davidson (HOG) selling to KKR and PIMCO?

Harley-Davidson is selling 95% of its residual interests in securitized consumer loan receivables to investment vehicles managed by KKR and PIMCO.

When will Harley-Davidson complete the full transaction with KKR and PIMCO?

Harley-Davidson expects to complete the remaining aspects of the transaction, including the sale of 4.9% common equity interests to each partner, by the end of October 2025.

How will Harley-Davidson use the proceeds from the KKR and PIMCO deal?

The company plans to use the $230+ million proceeds to support its previously announced capital allocation priorities.