Signa Prime and Development: Future Secured Despite Insolvency

PeopleOther ♦ Published: January 15, 2024; 21:36 ♦ (Vindobona)

The future of the two important branches of the Signa Group, Signa Prime and Signa Development, seems secure for the time being.

In Signa Prime, Benko has bundled Signa's shares in well-known properties such as the KaDeWe department store in Berlin. / Picture: © Wikimedia Commons; Jochen Teufel, CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0/deed.en)

The insolvency administrators of both companies confirm that the costs of continuing the business are covered, which means that self-administration remains in place in both restructuring proceedings. Norbert Abel, the restructuring administrator of Signa Prime, emphasized the goal of restructuring the company instead of breaking it up.

According to current information, there are no insurmountable obstacles to the continuation of Signa Prime Selection AG as a going concern and the conclusion of a restructuring plan, as reported by ORF. The financing of operations is secured, supported by a financial plan submitted by Signa Prime. In addition, the company could generate funds through the sale of its real estate portfolio. However, according to the Kreditschutzverband von 1870 (KSV1870), the company needs a capital injection of around EUR 300 to 500 million in the short to medium term. It remains unclear whether these funds will be provided by Signa investors.

Andrea Fruhstorfer, insolvency administrator of Signa Development, also reported sufficient liquid funds to cover ongoing operating costs, which will ensure the continuation of the company until the end of the restructuring process. An overview of the complex corporate structures at Signa has been gained and the focus is now on stabilizing the company. Both restructuring administrators, Abel and Fruhstorfer, as well as the creditor protectors, emphasized good and transparent cooperation with the Signa management. However, there is the possibility of further insolvencies of individual real estate project companies or service companies within the Signa empire to restructure the group or ensure its continued existence. However, these measures would have no direct impact on the continued existence of Signa Prime Selection AG.

In addition, the deadline set by Signa's Chief Restructuring Officer Erhard Grossnigg for a EUR 350 million capital injection caused additional tension. Grossnigg demanded this sum from existing investors by January 15. Alfred Gusenbauer, Chairman of the Signa Supervisory Board, emphasized that the deadlines do not end on Monday and that every effort is being made to raise the necessary capital.

KSV1870 announced that intensive negotiations have been underway since the opening of the restructuring proceedings to provide bridging finance to remain solvent. A creditors' committee has been set up for both Signa Prime and Signa Development, which is important for the transparency of the restructuring process. Withdrawal of self-administration remains possible, however.

Creditreform Managing Director Gerhard Weinhofer was optimistic about the restructuring process at Signa Prime and mentioned ongoing talks about the required capital injection. A solution is expected shortly. Investor and STRABAG co-founder Hans Peter Haselsteiner said he was still undecided about the current situation and considered the possibility of subscribing to the profit participation rights of Signa Prime to support the restructuring.

Signa Prime Selection AG, the largest operating subsidiary in the corporate network of Tyrolean real estate investor Rene Benko, includes major real estate projects such as Vienna's Goldenes Quartier, the planned Lamarr department store, Berlin's KaDeWe, and Hamburg's Elbtower project. Before the insolvency, the gross asset value of Signa Prime Real Estate was estimated at 20.4 billion euros.

Signa Development also had to initiate insolvency proceedings, with a gross asset value of around EUR 2.8 billion at the end of 2022. The real estate portfolio comprises 39 projects, including the Vienna Twentytwo and the Donaumarina Tower.

Despite the tense financial situation and the ongoing insolvency proceedings, the future of Signa Prime and Signa Development appears secure thanks to self-administration, financial security for operations, and constructive cooperation with the management and creditor protectors. The company management is working on a restructuring, supported by potential capital injections and the realization of the extensive real estate portfolio.

Signa

KSV1870

Creditrefom