Selfridges shareholder Signa files for insolvency

selfridges london
selfridges london

Selfridges shareholder Signa has filed for insolvency, sparking fresh questions over the future ownership of the luxury chain’s flagship Oxford Street store.

Rene Benko’s retail and property empire was toppled by a cash crunch on Wednesday after a Vienna court declared the business insolvent.

It has sparked speculation over the future of one of its most prized assets, Selfridges, which it partly owns alongside Thailand’s Central Group. Mr Benko’s company had joint control of both Selfridges’s property and operating companies until recently, but Central Group took majority ownership of the trading company earlier this month.

Signa still holds a 50pc stake in Selfridges’ property company, which controls sites including the flagship Oxford Street luxury department store. That business was loaded up with more than £1.7bn of debt earlier this year, with the loan secured against the freehold of the Oxford Street property.

It also still holds a minority stake in the Selfridges operating business. Restructuring experts are expected to look at offloading Signa’s stakes in a drive to raise money, potentially meaning a new landlord for Selfridges’ properties.

rene benko
Mr Benko founded European property developer Signa in 2000 - GEORG HOCHMUTH/AFP

A spokesman for Selfridges said it had the “ongoing and unwavering support of Central Group”, adding: “This does not change anything for Selfridges, we continue to operate and service our loans and lease obligations as normal. Selfridges trades independently from our shareholders.”

A spokesman for its Thai shareholder said: “Central Group remains steadfast in its commitment to safeguard and support its European luxury stores regardless of its partner’s financial circumstances.” It said it was in robust financial health and benefitted from “access to a wide range of funding streams to support the development of this unique portfolio”.

“We are well positioned to work through the current situation and ensure the best possible outcome for all stakeholders.”

In a statement on Monday, Signa said: “Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring could not be sufficiently secured, so Signa Holding GmbH is applying for restructuring proceedings with self-administration.”

The company said it was aiming for the “orderly continuation of business operations ... and the sustainable restructuring of the company”.

The insolvency sees Signa become one of the most prominent casualties of the European property crisis after it was hit by rising borrowing costs and falling property valuations.

Signa claimed its retail investments did not bring the expected success amid economic pressures in Europe.

The heavily indebted group also cited a “negative impact on business development in the real estate sector in recent months”.

Restructuring experts have been scrambling to secure Signa in recent weeks, which previously said it would unveil its restructuring strategy by the end of the month.

The European property developer, which also has stakes in the Chrysler Building in New York and Berlin’s KaDeWe luxury department store, was founded by Mr Benko, 46, in 2000.

However, he was ousted by shareholders earlier this month.

The announcement will alarm several European banks potentially caught in Signa’s fallout.

Julius Baer, a key lender to Signa, last week warned of a potential dip in full-year profits after setting aside SFr 82m (£74m) to pay for bad loans.

Switzerland’s second-largest wealth manager said that SFr 70m of provisions for credit losses had been added since the end of October, raising concerns it is exposed to Signa’s crisis.