Restructuring expert Arndt Gewitz is supposed to draw up a rescue plan for Cigna Group. Just getting an overview is difficult. Signa does not have a consolidated balance sheet; Those involved, for better or worse, rely on Banco’s inside knowledge.
Rene Benko has handed over the chairmanship of Signa Holding’s advisory board to German restructuring expert Arndt Gewitz. However, it is not clear what unofficial role the company’s founder will play in the upcoming restructuring, as Signa continues to follow a very selective information policy.
Pinku is clearly having a hard time accepting the new reality. He remains convinced that Cigna “can have a very good future,” he said in a statement. He wanted to help build trust, as if he wasn’t the problem. Jewitz is more cautious. It is now necessary to “begin the comprehensive integration of the company.”
Pinko makes himself irreplaceable
Lending banks now have significant influence in Signa. Signa needs liquidity, and the company is unlikely to provide that liquidity if Benko continues to lead the advisory board.
However, it was initially unclear who would exercise Banco’s voting rights. Signa Holding later said that Geiwitz would look after the interests of the Benko Family Private Foundation “at its own risk” during the restructuring. It appears that the developer will exercise voting rights; But at the same time, the goal seems to be to avoid the impression that a transfer of ownership is underway.
Meanwhile, shareholders of Cigna Holdings in the diving station. He’s on vacation, and Hans Peter Hasselsteiner tells him about his office. This is an astonishing statement, because Haselsteiner owns at least 15 percent of Signa Holding.
Banks and Geiwitz cannot cut the connection between Benko and Signa. The group is highly indebted and does not have a consolidated balance sheet. There is no supervisory or administrative body that has a comprehensive overview of the financial situation. Banko is therefore an important source of information on which Jewitz and the banks rely for their inside knowledge. The renovator is now responsible for the concerns of multiple stakeholders.
From Zurich Bahnhofstrasse to Luxembourg
The example of the Globus department store on Bahnhofstrasse in Zurich shows the complexity of the Signa empire. This is the flagship of the Globus group. In recent years it has been extensively converted into a luxury department store aimed at attracting wealthy locals and tourists. How does this house relate to the Signa Collection and René Benco?
Although the property is located on Zurich land, it belongs to a real estate company based in Luxembourg called “Zürich, Schweizergasse 11 Immobilien.” This comes out of the Luxembourg commercial register. The Globus House in Zurich is the sole property of the company. According to the annual financial statements for 2022, the property is listed at a value of 757 million francs. The house is also mortgaged for 534 million francs, and a consortium of CS and cantonal banks is said to be behind these loans.
It is not unusual for companies to be established in Luxembourg to work in real estate. This may be attractive from a tax perspective, and it is also easier to attract European capital that is based in the EU. But what’s special is the complex ownership structure built on top of the underlying company.
The company “Zürich, Schweizergasse 11 Immobilien” in Luxembourg belongs to another Luxembourg company called Matterhorn Immobilien Holding. Ownership of all Globus buildings in Switzerland is pooled in this company, including properties in Bern and Basel.
And to Austria
Ownership from this company is split between the two joint venture partners who jointly own Globus. On the one hand, this is the Thai central group. It owns 50% of Matterhorn Immobilien Holding through another intermediary company in Luxembourg.
On the other side, Sina’s name appears for the first time. The remaining half of the company belongs to the Signa Prime Matterhorn holding company. This is a company based in Vienna city center and registered in the Austrian Commercial Register.
This company, in turn, is wholly owned by another company, Signa Prime Swiss, whose registered office is located at the same address in Vienna.
Build with thousand communities
This company, in turn, owns Signa Prime Selection AG, headquartered in Innsbruck. This brings us to the most important company in the Cigna empire. Signa Prime is the largest private real estate company in Europe, with properties and investments worth approximately €20 billion (as of the end of 2022). However, it appears to be in turmoil at the moment as it still needs €200 million to repay the bonds in November.
From Signa Prime – an independent company with its own supervisory board – there is still a step towards René Benko. It only appears in Innsbruck-based Signa Holding, which owns 58% of Signa Prime. Benco is the majority owner of Signa Holding through its institutions.
So, it’s a long way from the globe on Bahnhofstrasse to René Benko. Meanwhile, the Zurich department store is just one piece of the mosaic in the grand Cigna building. According to the latest annual financial statements, Cigna Prime alone includes 316 companies in the scope of the merger. The entire Signa Group, which includes real estate as well as supermarket chains, is said to comprise more than 1,000 companies.
Tax and financing advantages
Why do we make such nested constructions? According to corporate lawyers, on the one hand this can have tax advantages. On the other hand, it becomes easier to structure the company’s financing. In the case of the Globes building in Zurich, the banks granted mortgages directly to the relevant company at the lowest level – and in the event of an emergency, they had direct access to the property as collateral.
Meanwhile, Signa companies at higher levels can obtain loans elsewhere. However, the multilevel construction of the globe appears remarkably complex. “You need very good reasons to reach five levels at once,” says one of the experts interviewed.
A difficult task for restorers Geiwitz
In the case of the Signa group, nesting now also causes problems. The reorganizer Geiwitz is faced with the task of obtaining an overview of the building: where are the assets located, what are the financial flows between companies, where are the funds needed?
This is also a difficult task from a legal perspective. “Officials must now pay close attention to the payments they are still allowed to make without risking personal liability,” says Viennese lawyer Gottfried Schellmann, who specializes in law restructuring, among other things. The principle applies: all creditors must be treated equally.
This brings with it difficult demarcation questions. For example, can the builder pay a tradesman to complete the project? As Signa is still under construction, large amounts of liquidity are needed every day; Meanwhile, promising projects must at least be completed quickly for Signa to generate income.
Finally, one problem is the higher construction costs if it has to be refinanced. In this case, the financial institution requires a higher level of security. But no one knows how far the Signa Group can still achieve this. According to Cigna Holdings, the restructuring plan is supposed to be available and presented to shareholders by the end of November.
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