As already reported in the OÖN, Signa’s previous backers should inject more money in order to ensure that the restructuring process is self-managed and to avoid emergency sales. Further details are now available from a letter from the restructuring executive of the two Signa subsidiaries Prime and Development, Erhard Grossnigg, to Signa investors, as “profil” and “Spiegel” reported on Thursday. Grossnig spoke to “profil” regarding “a positive response”. Major investor Hans-Peter Haselsteinger said in the OÖN the previous week that investor money was “possible“if everyone agrees”.
According to the letter, it is regarding 350 million euros, which Grossnig is trying to raise by January 15th. The sum is intended to support the two insolvent stock corporations Signa Prime and Signa Development through the next three to four months, “profil” and “Spiegel” quote in online reports from the circular from the reorganizer Grossnigg, who was brought on board in December.
“Preserve value instead of destroying assets”
Self-administration in insolvency proceedings can “only work if ‘we’ receive liquidity in order to continue our valuable construction projects and maintain the true value instead of destroying assets,” the letter continues, according to the media report. The intention is that the capital injection should help to avert a break-up and thus even greater damage to investors.
Image: OÖN Graphics
According to “profil”, the insolvency applications from Prime and Development also mention bridging financing “through the issuance of a profit participation right/bulk loan”.
“For professional investors only”
However, the renewed investment in the ailing Signa network is associated with risk. It is, the letter says, “only suitable for professional investors who can accept the risk of a significant loss or even a total loss of their investment.”
Bild: martinstoebich.com
The investors’ cash injection should take place via profit participation certificates. The interest is therefore 9 percent annually with half-yearly interest payments and a share in the additional income that an orderly settlement should bring as opposed to a break-up. According to the reports, the two-year term of the participation certificates can be extended twice by one year each.
“Initial feedback positive”
Grossnig told “profil”: “The initial response to the letter was positive and I hope and am optimistic that we will get the money we need.” However, there are no firm commitments yet. According to “Spiegel”, the project is met with great skepticism. A core problem is that it is unclear how much capital will be necessary if the 350 million euros are used up in three to months. Investors who take part run the risk of losing this money too or having to add more money, according to the German news magazine.
The real estate empire built by Tyrolean Rene Benko has grown rapidly in the zero interest phase of the past few years. The group includes numerous commercial properties in Germany and Austria as well as the German department store group Galeria Karstadt Kaufhof, which has already gone through two insolvency proceedings. Signa is currently building the 245 meter high Elbtower in Hamburg. However, the project is at a standstill because Signa can no longer afford the monthly construction costs of a rumored 25 million euros. It is unclear what will happen next in Vienna with the major Lamarr construction site at the former Leiner location on Mariahilfer Straße. The luxury department store was scheduled to open in 2025, so far only the reinforced concrete frame is standing. Signa Holding filed for bankruptcy at the end of November, followed by the subsidiaries Prime and Development at the end of December.
