(Bloomberg) -- A member of an old Austrian noble family and the scion of a German retail fortune are calling for a special audit to determine whether there was wrongdoing in German property investor VIB Vermoegen AG’s dealings with its parent company.
The two shareholders of VIB have called separately for a vote on the appointment of a special auditor at the company’s annual meeting Aug. 14. The aim would be to uncover any breaches of duty or violations of law involved in VIB’s transactions with majority owner Branicks Group AG, the shareholders said in submissions for the meeting agenda.
VIB’s supervisory board said the resolutions from Elisabeth Auersperg-Breunner and Mann Vermoegensverwaltung eGbR should be rejected.
“There is no reason for the special audit,” the board said in one response, noting it had consulted external advisers during the deals. “There are no indications of any economic damage or disadvantage to VIB as a result of these measures and legal transactions.”
A spokesperson declined to comment on behalf of Branicks. The company owns about 69% of VIB’s shares.
Branicks, squeezed by the collapse in transaction volumes and pressure on valuations, has been in a race to raise cash over the last year and has turned to deals with VIB to boost funds. While Branicks bought some time to repay debts as part of a restructuring this year, the landlord still needs to refinance borrowings including a bridge loan of €120 million outstanding that matures at year’s end.
Auersperg-Breunner asked for property deals where VIB bought offices from Branicks to be examined for signs they disadvantaged the subsidiary, among other transactions. VIB said the decision was a diversification away from its historical focus on logistics and light industrial properties, areas that have been more cushioned from the real estate downturn than office buildings.
It should be examined “to what extent the impetus for this acquisition came from Branicks,” wrote Auersperg-Breunner, who married into an Austrian family of aristocratic origins and is the daughter of the late German industrialist Friedrich Karl Flick.
Mann Vermoegensverwaltung also pointed to a €250 million loan from VIB to Branicks, arguing it was granted when the parent was already in financial difficulties. Shareholders of Mann Vermoegensverwaltung, which said it owned about 10.7% of VIB, include Johannes Mann, the son of German retail property owner Hugo Mann, and other family members, according to June company filings.
Mann Vermoegensverwaltung also said members of the VIB supervisory board sit on the boards of Branicks, meaning it was possible that Branicks “induced” VIB to make the loan “or, in the event of a deterioration in Branicks’ creditworthiness, to refrain from taking the necessary measures,” it wrote in its submission for the meeting.
VIB’s supervisory board said the granting of the loan was in the interest of VIB.
“Any intercompany transactions (including the intercompany loan) between VIB Vermoegen AG and Branicks Group AG were negotiated bilaterally and concluded at market conditions, i.e. at arm’s length while respecting corporate governance standards,” the board said in an emailed statement. “In doing so, any intercompany transaction was also validated by external fairness opinions.”
Mann Vermoegensverwaltung didn’t respond to requests for further comment. Auersperg-Breunner’s office declined to comment.
Branicks shares have fallen 50% in the past year, while VIB’s stock is down 46%. Branicks’ €400 million high-yield notes due in 2026 are quoted at 44.4 cents on the euro, according to data compiled by Bloomberg, levels that are considered distressed.
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