Brussels: A unit of Signa Prime Selection AG has filed for insolvency in a Berlin court last Friday, according to Der Spiegel, indicating efforts to save the sprawling property and retail conglomerate are faltering.
Signa Real Estate Management Germany GmbH couldn’t meet its payment obligations, the German magazine said, citing a request submitted by the company.
The firm is a fully-owned subsidiary of Signa Prime, which co-owns the Selfridges department store in London and Berlin’s KaDeWe, and is itself the largest division in the group founded by Austrian tycoon Rene Benko.
A full-blown insolvency of Signa Prime could come as a shock for European property markets as Signa Prime and Signa Development, another unit, valued their assets at more than 23bil (US$25bil) at the end of 2022.
Signa Real Estate Management serves as “a central service provider within the Signa Group for the development and support of commercial properties in prime locations” in Germany, according to an annual report.
Earlier, Der Standard said: “Signa may hold a meeting with employees tomorrow to inform them of the insolvency and further steps.”
A spokesman for Signa didn’t respond to a call seeking comment. The unit didn’t appear on a German registry of insolvency requests as of last Friday evening.
Signa has been seeking cash from investors to plug a 500mil funding gap this year alone, and another 1.5bil by the middle of 2024.
The parent company, Signa Holding, appointed restructuring expert Arndt Geiwitz earlier this month to lead a turnaround and mend financing strains that had brought construction work at several projects to a standstill.
It wouldn’t be the first insolvency by a company within Benko’s empire.
Geiwitz was in charge of insolvency proceedings in the German department store chain Galeria, which ultimately cost taxpayers about 590mil due to the writedown of Covid-era loans.
Signa’s online sports retail unit, which was listed in the United States in 2021 via a US$3.2bil special-purpose acquisition company deal, filed for insolvency last month after Benko’s Signa Holding withdrew a financing commitment.
A broader insolvency would leave a wide range of investors struggling to recoup their money. Signa’s shareholders – the first in line to take losses – include some of Europe’s richest families, including Austrian construction tycoon Hans Peter Haselsteiner and German transportation magnate Klaus-Michael Kuehne.
Saudi Arabia’s Public Investment Fund has a junior debt position distributed throughout the Signa companies.
Arini, the London hedge fund founded by former Credit Suisse credit trader Hamza Lemssouguer, is among the largest holders of a 300mil Signa Development bond, which are indicated at 27 US cents on the euro, according to data compiled by Bloomberg.
Signa Prime and Signa Development had 1.76bil in liabilities related to profit participation rights at the end of 2022.
Bank creditors include a broad range of Austrian, German and Swiss lenders. — Bloomberg
