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Signa has appointed a new chair to spearhead a restructuring of the indebted European property group after shareholders rebelled against founder René Benko.
Benko, 46, has agreed to relinquish his role as chair of the advisory board to German turnaround specialist Arndt Geiwitz, the company said on Wednesday. No details were given on the restructuring plan, but two people familiar with the discussions said options included selling assets and raising funds from existing investors.
“Given the current situation, this is the best solution for the company as well as its partners, investors and employees,” Benko said in a company statement.
“Signa needs calm and order at this time. We will approach these important tasks prudently and rationally,” said Geiwitz in the statement, adding that the company needed “comprehensive consolidation”.
Signa, which owns a real estate portfolio worth €27bn including stakes in Selfridges, KaDeWe and the Chrysler building, has been facing financial difficulties for the past year.
The group has struggled with rising interest rates, declining consumer spending and a large debt pile. It is facing a €200mn debt repayment at the end of this month. Lenders to Signa include Austria’s Raiffeisen and Erste Group and Switzerland’s Julius Baer.
The European Central Bank has asked eurozone lenders to make provisions for potential losses on their Signa debt during the summer, according to ECB officials.
In February Deutsche Bank cut all ties with Signa because of its own concerns over continuing with the company as a client.
A spokesperson for Raiffeisen said the bank could not comment on specific clients, adding that it has a “highly diversified” commercial real estate lending book “backed by very good collateral”. Julius Baer declined to comment. Erste Bank said it could not comment on client matters, adding: “There is no reason for our shareholders or our business partners to be concerned.”
Benko, who became a billionaire by the age of 40 and is worth an estimated €5.6bn, is also entangled in a political crisis in his native Austria.
A corruption investigation into the government of Austria’s former chancellor Sebastian Kurz resulted in a police raid on Signa’s Innsbruck headquarters last October. No charges have been made against Signa or Benko, which have not commented on the raid.
Benko remains Signa’s largest shareholder, through a web of holding companies in Austria, Switzerland and offshore, which link back to his family trusts in Liechtenstein.
“What’s important now is to restore trust, and I want to play my part in that,” Benko said in the statement on Wednesday. “Signa’s property portfolio is, and remains, unique. I’m absolutely certain that the company has a very bright future.”
