Signa Prime set to present repayment plan in bid to avert liquidation

SIGNA Prime Selection will lay out on Monday (Mar 11) how it plans to pay back creditors, marking a crucial step in its effort to avoid liquidation.

The luxury property unit in the insolvent Signa conglomerate, founded by fallen Austrian tycoon Rene Benko, will unveil the so-called restructuring plan at a meeting of its creditor committee, two people familiar with the matter said, asking not to be named discussing private matters. That body consists of representatives from two Austrian creditor associations and a government office known as Finanzprokurator.

The leadership of Signa Prime needs adoption of the plan by a majority of the firm’s creditors to avoid losing management rights, which would hand more control to an outside administrator and take the company closer to outright liquidation. That vote will take place at an assembly of all creditors on Mar 18.

Signa Prime was a central unit in Benko’s sprawling retail and property empire that saw rapid growth during a decade of booming asset prices, only to come crashing down last year as rate hikes by central banks lowered real estate valuations globally. The firm has since been racing to raise funds and it recently put up for sale an Austrian portfolio of assets including the Park Hyatt hotel in Vienna. 

The plan that Signa Prime will present on Monday seeks to convince creditors that the current management’s strategy will stabilise the firm and repay creditors at least 30 per cent of their claims within two years, which is the legal requirement in Austria for the kind of self-administration the firm is trying to pull off. The step comes after months of efforts by Signa Prime’s insolvency administrator, Norbert Abel, to untangle a complex web of debt and guarantees. 

Representatives for Signa Prime and Abel declined to comment. BLOOMBERG