Signa Crisis: Call to Investors for Financial Support
Signa Holding, a prominent real estate company, is facing financial difficulties. Erhard Grossnigg, the Chief Restructuring Officer of the Signa subsidiaries Prime and Development, has sent a letter to investors urgently requesting additional funding.
The Signa Group's construction sites have come to a standstill due to the company's crisis. / Picture: © Wikimedia Commons/ Uwe Rohwedder/ CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)
The required sum of 350 million euros is to support the two insolvent stock corporations over the next three to four months. This step is necessary to secure self-administration in the insolvency proceedings and avoid distress sales.
According to Grossnigg, maintaining liquidity is crucial to continue the construction projects and maintain the true value of the companies, as reported by ORF. The planned capital injection is intended to prevent the companies from being broken up, which could lead to even greater losses for investors.
However, the new investment is associated with risks. It is specifically intended for experienced investors who can accept the risk of a considerable loss or even a total loss of their investment. The financial support is to be provided in the form of profit participation certificates. These offer nine percent annual interest with semi-annual interest payments and a share in the additional income generated by an orderly liquidation as opposed to a break-up. The term of the profit participation certificates is set at two years, with the option to extend them twice by one year each time.
Grossnigg told "Profil" that he is optimistic about the initial response to the letter and hopes that the necessary funds can be raised. However, no firm commitments have yet been made. Many reports express a great deal of skepticism regarding the project. A key problem is the uncertainty about capital requirements after the three months. Investors who participate risk losing this money too or having to invest again.