Rene Benko is pulling back from large parts of his retail empire as the Austrian real estate tycoon works to shore up his core business in landmark hotels and prime properties.
(Bloomberg) — Rene Benko is pulling back from large parts of his retail empire as the Austrian real estate tycoon works to shore up his core business in landmark hotels and prime properties.
Benko’s holding company Signa Holding this week unexpectedly withdrew a vital funding agreement worth €150 million ($159 million) to Signa Sports United N.V., an e-commerce company specializing in sports equipment. The equity commitment had been confirmed in a side letter as recently as Sept. 27, SSU said in a statement Monday.
The decision to pull the commitment came a day before another Signa affiliate agreed to sell sports retailer SportScheck to UK-based Frasers Group for an undisclosed amount.
The two deals are the strongest indication yet that Benko is becoming more reluctant to fund loss-making retail businesses he acquired in recent years, in an apparent reversal from the diversification strategy he pursued in the boom years. His sprawling property group is among firms at the epicenter of the commercial real estate turmoil, with the European Central Bank telling several lenders to Signa to take a financial hit on their exposures, Bloomberg reported in August.
A spokesperson for Signa Holding didn’t immediately respond to phone calls seeking comment.
SSU announced earlier this month it will delist from the New York Stock Exchange after a slump in its share price since it went public in a SPAC deal less than two years ago. The company has failed to record a profitable quarter since then and grappled with a cash squeeze, weak consumer demand and excessive inventory.
Signa Holding has provided various liquidity pledges to support SSU, with the latest €150 million commitment intended to fund operations through September 2025. Prior to termination, SSU had drawn down just €7 million of that funding.
The latest commitment “constituted the basis of management’s going concern and liquidity assumptions,” said SSU, adding it “will evaluate appropriate measures” as a result.
Benko rose to riches by buying up retail and hotel properties mainly in prime locations in German-speaking countries, benefiting from an asset boom on the back of negative interest rates. As rising borrowing costs weigh on property values, he’s been forced to shore up his finances and scale back his empire.
The tycoon’s property and retail company in June sold Austrian furniture stores Kika and Leiner to boost cash to fund development projects, prompting bonds issued by companies in his conglomerate to rally. The furniture chain filed for insolvency shortly after.
Investors in Signa Holding recently injected about €400 million into the company to boost capital, Handelsblatt reported in July.
–With assistance from Marton Eder.
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