Austria - Top manager at Signa dismissed without notice due to suspicion
The ailing real estate and retail group Signa has dismissed the CEO of its most important subsidiaries. In extraordinary supervisory board meetings of Signa Prime Selection AG and Signa Development Selection AG, their CEO Timo Herzberg was relieved of his functions with immediate effect and dismissed for cause and without notice, the Signa Group, founded by billionaire René Benko, announced in Vienna.
The reasons for the dismissals are an urgent suspicion of gross violations of duties as a member of the Management Board, it was further stated. The reorganizer Erhard Grossnig will take over the function of CEO in both real estate companies, which are to be reorganized and restructured. Several Signa Group companies had recently filed for insolvency.
Abandoned construction projects in Berlin and Hamburg
"Unfortunately, we had to make this decision and take this tough step. The suspicious situation was clear and left the supervisory boards with no other choice," said the chairman of the supervisory boards of the two companies, Austria's former chancellor Alfred Gusenbauer. Particularly in these challenging times, one hundred percent trust in the people involved and unity in decision-making are required.
The most important properties and construction projects in the Signa portfolio belong to Signa Prime - including the Elbtower construction project in Hamburg, which is currently at a standstill, the KaDeWe in Berlin and department store properties of the Galeria Karstadt Kaufhof chain. Signa Prime posted a loss of around one billion euros in the previous year and had around 10.8 billion euros in debt at the end of 2022. Signa Development posted a loss of 316 million euros.
In the low-interest phase of recent years, Benko was able to take out cheap loans and attract financially strong investors to significantly expand his group. The recent rise in interest rates, construction costs and energy prices have put his complex network of companies in a precarious position.
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- The dismissal of Timo Herzberg also impacts Karstadt, a major subsidiary under Signa Prime Selection AG, as he was previously in charge of its retail business operations.
- In light of these developments, some investors in Austria, including elbtwoer, have expressed concern about the financial health of their investments in Signa's retail trade in Germany, such as department stores in Vienna and Berlin.
- Rene Benko, the founder of Signa, is reportedly considering a potential sale of some real estate assets, such as a parking garage in Vienna or department store properties in Berlin and Hamburg, to raise funds and mitigate the company's financial difficulties.
- To further strengthen its presence in the retail trade sector, Signa recently entered into a strategic partnership with a local Austrian retailer, aiming to expand its footprint in Vienna's retail market.
- Uncertainty and speculation are now circling around Signa's future, with questions arising about the company's ability to complete its ongoing construction projects, such as the Galeria Karstadt Kaufhof department store in Vienna and the Elbtower in Hamburg.
- In an attempt to reassure its stakeholders, Signa has begun a proactive communication campaign, emphasizing its long-term commitment to the success and growth of its retail and real estate businesses in Germany and Austria.
Source: www.stern.de
