Prime

"on the national, continental and global fronts. Desmarais himself had also participated in general market investments through a maze of personal and family-held investment and holding companies so inter¬ twined that even their names seem to merge: Prime, Gabriel, Gelco, Trans-Canada Corporation Fund, Sanpalo, Pansolo, Nordex, Probec, Abonnec, Primgab, Beldo, Polprim, Louidem, Paquerais, Adremed, Sofiamar — all were vehicles to ensure that the portion of wealth accruing to the Desmarais family interest in Power and its holdings, along with other, private investments, moved upward as dividends, at the minimum rate of personal tax payable by individual family members, for management, reinvestment and other dispositions."

"In Austria, he goes into business with the co-owner of the construction company Strabag, Hans Peter Haselsteiner. In 2013, Haselsteiner buys into Prime. With this, Benko has gained perhaps his most important shareholder ever. For Haselsteiner, who has also become one of the biggest construction entrepreneurs in Germany with acquisitions such as Züblin, has a lot of money and a network that reaches deep into politics. He was himself a member of parliament for the Liberals in the National Council, the Austrian parliament. And political connections are as important to a builder like Benko as daily bread is to others."

"And Benko served the fantasy of ever higher, further, better with new acquisitions. Thus, he transformed the real estate company Signa, which only invested in prime locations in core Europe, into a conglomerate of real estate, trade and media, and also a bit of digital business. From a business in which he was more knowledgeable than anyone else, it becomes an increasingly complex conglomerate. In 2013, Benko entered the German department store business with the purchase of Karstadt, more of an opportunity than a long-planned venture. Five years later, he also secured the acquisition of Kaufhof after a long attempt. With the idea of merging into the German Department Store AG with high synergies, he attracts fresh investors. Among them is Roland Berger, who invests in the still-young retail division, but also in the two main Signa companies, Prime and Development."

"The spectacular growth of the real estate division Prime, which according to an investor document had doubled the value of its property portfolio to 11.5 billion euros within just two and a half years, thus carried high risks. When financial experts internally pointed out the dangers to René Benko, he liked to dismiss the doubters with the phrase "I am an entrepreneur, not an abstainer." However, the risks must have been well known to the founder and financial wizard. Apparently, he consciously took these risks in order to continue growing rapidly."

"In 2017, the foundation board decides to invest in Signa, with RAG acquiring a 5 percent stake in Prime and a 3.5 percent stake in Development, almost simultaneously the Agricultural Insurance Association from Münster (LVM) also strikes. Benko is aware of the needs of insurers and foundations that rely on generating returns. Representatives of the RAG Foundation even join the supervisory board of Signa real estate companies, but remain largely invisible there."

"In the end, the winners and losers of the Galeria bankruptcies during and shortly after the coronavirus pandemic become clearly apparent. In the first bankruptcy proceedings, 81.4 million Euros are incurred for consulting fees, 41.5 million of which were expenses for the protective shield procedure, and 39.9 million flowed in the subsequent bankruptcy proceedings. A large part of that is collected by Geiwitz and his people, and in the second process, it is around 52 million. Nearly ten thousand jobs are lost. And the fool is undoubtedly the state. In total, two loans amounting to 680 million euros are being provided by the Economic Stabilization Fund for Galeria – amid considerable doubts from some actors and also criticism from the public. Why invest money in department stores when time has passed them by and fewer and fewer customers are wandering into the largely deserted floors manned by salespeople? Why give money to Benko and his Signa when he continues to report high profits for his real estate and in the crisis year of 2020 delighted his investors in the Prime with distributions of more than 200 million euros?"

"Although dissatisfaction was slowly spreading among the shareholders, René Benko usually managed to impose his will on them. His specific mix of persuasion, flattery, and begging worked well in the individual divisions like Prime, but also in the holding company, where important shareholders such as Ernst Tanner, Hans Peter Haselsteiner, or Torsten Toeller were invested. This had the advantage for them that their interests were identical to those of René Benko. Because he also held shares in the holding through his private foundation. However, there were at least two disadvantages that the holding investors accepted: Firstly, unlike Benko, they could not independently meddle in the other divisions. And secondly, the holding almost had no assets of its own, only shares in the individual divisions. When there was nothing left to take, the flow of money to the holding dried up. And only costs and debts remained. Therefore, a consolidated balance sheet would have been even more important for the holding shareholders, that is, an overview of the actual financial situation of the entire structure after deducting all intergroup mutual shareholdings, receivables and debts, deliveries and services. However, despite several attempts by shareholders, Benko had never provided this, so that only he and some managers, like the CFO Manuel Pirolt, had a really deep insight."

"Most of the shareholders did not have Benko's private foundation as a contracting partner, but the holding company. Roland Berger, who had invested in low percentages in the Signa companies Prime, Development, and Retail, managed to partially exit. Apparently, he pressed for payment from Benko early on and exchanged about half of his Prime shares for money. Berger benefited from the high market value of the shares, which had multiplied since his entry. However, at the end of the day, Berger will likely exit his Signa investment with a small double-digit million loss, Torsten Toeller will lose a triple-digit million amount, and in the fiscal year 2023, he will write off a book value of 196 million euros, which can be read in the annual financial statement of "Fressnapf" Luxembourg."

"However, many things were quite different from what is known from the stock market, where all shareholders are treated equally. Benko is said to have told each Signa investor their own tailored story. Many had an individual special deal. Some, like the RAG Foundation or Kühne, received dividends for 2022 if they made a fuss – something the other shareholders were not allowed to know. Some, like Roland Berger or temporarily Torsten Toeller, were allowed to attend the supervisory board of Prime as guests if they insisted. Others were not. Numerous investors were given put options, which allowed them to exit within certain periods. Others were not."