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Signa Holding, the central firm within the sprawling European property empire of Austrian billionaire René Benko, has filed for insolvency proceedings in Vienna.
In an announcement, the closely indebted group mentioned it had utilized for self-administration — an idea in Austrian company legislation during which an organization makes an attempt to restructure itself, with out handing full management of the method to an exterior administrator.
“Regardless of appreciable efforts in latest weeks, the mandatory liquidity for an out-of-court restructuring course of couldn’t be sufficiently secured, and so Signa Holding has now utilized for reorganisation proceedings,” Signa mentioned on Wednesday.
The submitting will increase considerations for dozens of European banks, together with Switzerland’s Julius Baer and Austria’s Raiffeisen, over their publicity to Signa and Benko, which has despatched their shares down in latest days.
Each banks declined to remark however have beforehand confused that their lending to the group was properly collateralised.
Julius Baer has excellent money owed of greater than SFr600mn to Signa, and Raiffeisen Financial institution Worldwide greater than €750mn, in keeping with folks conversant in the matter. Analysts at JPMorgan mentioned Signa owed a minimum of €13bn to lenders in a be aware final week.
Signa Holding’s administration can even ship a shockwave throughout central Europe’s retail sector because it prepares for its most essential month of the 12 months: Signa is almost all proprietor of the area’s largest shops, together with Germany’s Galeria Kaufhof and KaDeWe, and Switzerland’s Globus.
Altogether Signa says it has belongings, which embrace luxurious motels and central metropolis workplace buildings, value €27bn, with an extra €25bn of tasks in its pipeline.
A sprawling community of about 1,000 separate company entities, with Signa Holding at its centre, it has been going through monetary difficulties for greater than a 12 months, as its aggressive, debt-fuelled enterprise mannequin was hit by rising rates of interest.
This 12 months alone Signa was attributable to pay again €1.3bn to lenders, however has struggled to take action, resulting in standstill agreements with banks and an more and more determined seek for new capital, which noticed Benko flying usually to the Center East and turning to hedge funds such because the US activist Elliott Administration.
All declined to speculate, nonetheless.
Benko’s current co-investors, who’re entangled within the group at many alternative ranges and through completely different autos designed to permit Benko to take care of management, additionally refused to stump up additional cash and compelled a boardroom rise up initially of this month.
These concerned embrace a number of the most outstanding names in European enterprise: France’s Peugeot household; Tetra Pak’s Rausings; logistics magnate Klaus-Michael Kühne; Roland Berger, founding father of the eponymous worldwide administration consultancy; Swiss chocolate group Lindt & Sprüngli’s chair Ernst Tanner; Austrian industrialist Hans Peter Haselsteiner; and pet meals tycoon Torsten Toeller. Even the heirs of Austrian components 1 racing legend Niki Lauda personal shares.
At their insistence, Arndt Geiwitz, a German insolvency skilled, was introduced on this month to take management and try a last-minute rescue deal to keep away from administration.
Signa’s administration now has little room for manoeuvre. Though it can lead the chapter proceedings, beneath Austria’s self-administration regime an exterior administrator will supervise its actions, with a veto proper over any transactions.
Signa has 90 days to current a plan to collectors, which they need to settle for with the intention to cease the corporate being tipped into full administration.
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