Signa Holding, the central company in the sprawling European property empire of Austrian billionaire René Benko, has filed for insolvency proceedings in Vienna. Signa is part-owner of department store group Selfridges, which in turn owns Brown Thomas and Arnotts in the Republic.
In a statement, heavily indebted Signa said it had applied for self-administration – a concept in Austrian corporate law in which a company attempts to restructure itself, without handing full control of the process to an external administrator.
“Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring process could not be sufficiently secured, and so Signa Holding has now applied for reorganisation proceedings,” Signa said on Wednesday.
The filing will raise concerns for dozens of European banks, including Switzerland’s Julius Baer and Austria’s Raiffeisen, over their exposure to Signa and Mr Benko, which has sent their shares down in recent days.
Both banks declined to comment but have previously stressed that their lending to the group was well collateralised.
Julius Baer has outstanding debts of more than 600 million Swiss francs (€624 million) to Signa, and Raiffeisen Bank International more than €750 million, according to people familiar with the matter. In a note last week, analysts at JPMorgan said Signa owed at least €13 billion to lenders.
Signa Holding’s administration will also send a shock wave across central Europe’s retail sector as it prepares for its most important month of the year: Signa is the majority owner of many the region’s biggest department stores, including Germany’s Galeria Kaufhof and KaDeWe, and Switzerland’s Globus.
Earlier this month, Signa’s Thai partner in Selfridges, Central Group, said it had majority control of the department store company by converting a loan provided to it by one of its subsidiaries into equity.
Altogether Signa says it has assets, which include luxury hotels and central city office buildings, worth €27 billion, with a further €25 billion of projects in its pipeline.
A sprawling network of about 1,000 separate corporate entities, with Signa Holding at its centre, it has been facing financial difficulties for more than a year, as its aggressive, debt-fuelled business model was hit by rising interest rates.
This year alone Signa was due to pay back €1.3 billion to lenders, but has struggled to do so, leading to standstill agreements with banks and an increasingly desperate search for new capital, which saw Benko flying regularly to the Middle East and turning to hedge funds such as the US activist Elliott Management.
All declined to invest, however.
Mr Benko’s existing co-investors also refused to stump up more cash and forced a boardroom rebellion at the beginning of this month.
At their insistence, Arndt Geiwitz, a German insolvency expert, was brought in this month to take control and attempt a last-minute rescue deal to avoid administration.
Signa has 90 days to present a plan to creditors, which they must accept in order to stop the company being tipped into full administration. – Copyright The Financial Times Limited 2023
