Two Signa units file for insolvency

Two subsidiaries of major European property company Signa have filed for bankruptcy, the company said on Thursday.

Prime Selection AG, co-owner of properties such as the Selfridges department store in London and Berlin’s KaDeWe, filed for self-administered restructuring in Vienna's commercial court, while Signa Development Selection - which focuses on residential and commercial urban development projects - would do so on Friday.

Both are part of the now-insolvent Austrian Signa Holding.

"The aim is the organized continuation of business operations within the framework of self-administration and the sustainable restructuring of the company," the company said in a statement.

Online sporting goods division Signa Sports United filed for insolvency in October, while Signa Holding itself and several smaller subsidiaries announced their insolvency in recent weeks.

Signa Holding, a network of around1,000 companies, is owned by Austrian real estate and retail mogul Rene Benko, but has been hit by higher building costs, surging energy prices and interest rates.

Its total real estate assets, which include luxury hotels and shopping malls were valued at more than €23bn at the end of last year.

Major co-investor, the Thai Central Group, has already moved to take control of the operating business of Selfridges, after it converted a shareholder loan to equity. Saudi Arabia’s Public Investment Fund helped finance Signa’s investment in Selfridges, and has an indirect 10% stake in the store.

Reporting by Frank Prenesti for Sharecast.com