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Stepping Down in Austrian Style: Signa Bids Farewell to Timo Herzberg
In an unexpected turn of events, the top honcho at Signa's most significant subsidiaries, Timo Herzberg, found himself out of a job on the spot. The news broke during extraordinary supervisory board meetings for Signa Prime Selection AG and Signa Development Selection AG. The beloved real estate and retail group, Signa, founded by the billionaire René Benko, officially announced Herzberg's immediate dismissal due to "urgent suspicions of gross breaches of duty in his role as a Management Board member." With Erhard Grossnig stepping in to fill the void as CEO, both companies are set for a major reorganization and restructuring.
The unfortunate decision was made as a result of these grave suspicions, ensuring that "a hundred percent trust in the people involved and unity in decision-making are mandatory in these challenging times," as outlined by Austria's former chancellor Alfred Gusenbauer, who also served as chairman of the supervisory boards for the two firms.
Troublesome Times for Signa's Notable Assets
The dismissal of Timo Herzberg inevitably impacts Signa Prime's subsidiary, Karstadt, overseen by Herzberg in his retail operations, setting off waves of concern among investors in Austria, such as elbtwoer, who hold interests in Signa's retail trade in Germany, including prominent department stores in Vienna and Berlin.
As Signa continues to feel the heat, the founder, Rene Benko, contemplates strategic options to combat the company's financial predicaments, such as divesting top-tier assets like a Vienna parking garage or department store properties in Berlin and Hamburg. To further strengthen its retail market presence, the conglomerate has formed a strategic partnership with a local Austrian retailer, aiming to expand its footprint in Vienna's retail sector.
The Quest for a Comforting Narrative
In an attempt to console its stakeholders, Signa has initiated a proactive communication campaign, accentuating its long-term commitment to successfully navigating the retail and real estate sectors in both Germany and Austria. Despite the ongoing investigation and its uncertain impact on projects like the Galeria Karstadt Kaufhof department store in Vienna and the Elbtower in Hamburg, the company emphasizes its resilience in surmounting these challenges.
Insights:
- Allegations against Timo Herzberg and Manuel Pirolt, ex-executives at Signa, have led to lawsuits, with the firms seeking 6.6 million euros from Herzberg and 3.9 million euros from Pirolt. The Economic and Corruption Prosecution Office is currently investigating the case, discovering extravagant lifestyle habits that include expensive real estate and travel. The Kathrein Privatbank, a subsidiary of Raiffeisenbank, has also filed a complaint, alleging irregularities in Herzberg's activities.
- Signa is facing financial repercussions from the dismissal and investigations, as the company seeks 50 million euros in damages so far. Investigations into the financial impact are still ongoing, with an estimated 35.4 million euros already paid to the heirs outside of court.
- These developments are expected to have a detrimental impact on Signa's financial health and construction project management, potentially leading to delays or disruptions in ongoing projects.
