The European property big that owns half of New York’s Chrysler Building, almost all of Germany’s greatest shops and a part of Selfridges in London filed for administration on Wednesday, leaving lenders throughout Europe racing to evaluate their publicity to the group.
Signa Holding is the central entity within the sprawling business empire of Austrian billionaire René Benko, a part of an internet of firms that owns Signa’s portfolio of belongings, which incorporates scores of luxurious properties.
“This will be one of the most complex corporate restructurings since the financial crisis,” mentioned one Vienna-based lawyer who’s aware of Signa. “There is debt issued from all over the place and I don’t think anyone, even most insiders, even know who owns what after this.”
In a press release on Wednesday morning, the closely indebted group mentioned Signa Holding had utilized for self-administration — a process in Austrian company regulation through which an organization restructures itself with out handing management of the method to an exterior 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,” it mentioned.
Other key parts of the Signa community, a multi-layered possession construction of greater than 1,000 company entities and trusts in Europe, the US and offshore, are nonetheless operational, nonetheless, together with Signa Prime, which individuals with data of the main points say holds the group’s most precious belongings.
In whole, 120 banks are uncovered to Signa, based on a person with data of the group’s borrowing. They embody Switzerland’s Julius Baer and Credit Suisse, now a part of UBS, in addition to Austria’s Raiffeisen, Bank of China, France’s Natixis and Italy’s UniCredit.
Julius Baer has excellent money owed of greater than SFr600mn to Signa, and Raiffeisen Bank International greater than €750mn, based on individuals aware of the main points.
Both banks declined to touch upon particular shopper relationships, however harassed their industrial mortgage books had been properly collateralised.
In a observe final week, analysts at JPMorgan estimated Signa owed a minimum of €13bn to lenders in whole.
Many of its lenders are smaller regional banks which have financed native property tasks.
Several German state-owned Landesbanken, together with Frankfurt-based Helaba and Munich-based BayernLB, have excellent loans price lots of of tens of millions of euros, based on paperwork seen by the Financial Times. Helaba and BayernLB declined to remark.
Signa Holding’s administration will ship a shockwave throughout central Europe’s retail sector because it prepares for its most necessary month of the yr: Signa is almost all proprietor of the area’s greatest shops, together with Germany’s Galeria Kaufhof and KaDeWe, and Switzerland’s Globus.
It can be a shareholder within the Selfridges Group, although Signa’s stake was diluted as its issues started to take maintain this month by its co-investor, Thailand’s Central Group, which exercised fairness conversion rights connected to a shareholder mortgage.
Signa and Central collectively acquired Selfridges for £4bn almost two years in the past. As properly because the division retailer in London, the Selfridges Group contains retailers De Bijenkorf within the Netherlands, in addition to Brown Thomas and Arnotts in Ireland.
Central insisted that the shops had been unaffected by Signa’s administration.
“[We] remain steadfast in our commitment to safeguard and support our European luxury stores regardless of our partner’s financial circumstances,” Central mentioned in a press release. “We are in robust financial health and benefit from access to a wide range of funding streams to support the development of this unique portfolio.”
Germany’s greatest division retailer chain, Galeria Karstadt Kaufhof (GKK), which is owned by Signa, and has itself struggling financially for years, mentioned on Thursday there was no instant affect from Signa’s administration.
GKK introduced 1000’s of job losses this yr in an effort to stabilise its stability sheet. It had additionally been anticipating €200mn of assist from Signa, with the primary tranche due in February, to finance its turnaround plans.
“If Signa cannot provide its financial support as promised, Galeria management must be prepared,” mentioned Corinna Gross, head of the nationwide retail group at Verdi, Germany’s greatest union. “The constant bad news at Signa is causing unrest among Galeria employees. They want job security.”
In whole, round 40,000 individuals work in Signa-owned businesses, based on investor displays ready by the corporate in 2022. Signa’s web site beforehand mentioned the group had belongings price €27bn, with an additional €25bn of tasks in its pipeline.
The group has been in monetary difficulties for greater than a yr, as its debt-fuelled business mannequin has been hit by rising rates of interest.
In 2023 alone, it was attributable to pay again €1.3bn to lenders, however has struggled to take action, resulting in standstill agreements with banks and a seek for new capital that concerned Benko flying recurrently to the Middle East and talks with buyers together with hedge fund Elliott Management.
Benko’s co-investors have refused to stump up more money and there was a boardroom revolt initially of this month.
Shareholders embody a number of the most distinguished names in European business similar to France’s Peugeot household; Tetra Pak’s Rausings; Austrian industrialist Hans Peter Haselsteiner; and pet meals tycoon Torsten Toeller.
At their insistence, Arndt Geiwitz, a German insolvency knowledgeable, was introduced on this month to take management and try a rescue deal to keep away from administration.
Signa’s administration now has little room for manoeuvre. Although it should lead the method, underneath Austria’s self-administration regime an exterior administrator will supervise, with a veto proper over any transactions.
Signa has 90 days to current a plan to collectors, which they need to settle for with a view to keep away from full administration.
Additional reporting by Owen Walker in London
