AFR. Oroton Generic. Shot at the queen victoria building. Pic by Nic Walker. Date 24th March SPECIALX 0121231Iconic handbag retailer OrotonGroup is up for sale after becoming the latest casualty in Australia’s retail bloodbath and collapsing into voluntary administration.
The 79-year-old company revealed on Thursday that an eight-month strategic review which looked to sell, privatise, recapitalise or refinance the business had failed to find a viable option to secure its future.
About 60 Oroton stores would continue to trade as usual while administrators Deloitte Restructuring Services pursue a sale or a recapitalisation, the company said.
“The board is disappointed that it has had to take this step after running such a comprehensive process,” said interim chief executive Ross Lane, whose grandfather Boyd Lane founded Oroton in 1938.
“However … it is apparent that voluntary administration is necessary to protect the Oroton business and the future of this iconic Australian brand.”
Oroton has suffered falling sales in recent years and ran at a $14.2 million loss in 2017.
The company’s shares, which went into a trading halt on Tuesday while the board finalised the result of its review, had fallen from $7.80 in early 2013 to $2.44 a year ago. On Monday, they closed at just 43??.
Administrator Vaughan Strawbridge said he and his colleague Glen Kanevsky would be focused on continuing to operate the business as they seek to sell or recapitalise the company.
Restructuring the group was also a possibility. “Our ambition is that a stronger Oroton business will emerge from this process,” Mr Strawbridge said.
Oroton joins a string of mid-sized fashion retailers to collapse over the past 18 months, with Marcs, David Lawrence, Herringbone, Rhodes & Beckett, Payless Shoes and Pumpkin Patch all going under.
Oroton said in August that it would close its six Gap franchise clothing stores so it could focus on its core handbag brand.
The company’s stock is tightly held, with the founding Lane family controlling 21 per cent of shares while fund manager and long-time company backer Will Vicars, of Sydney-based firm Caledonia, owns 18.2 per cent of shares.
Mr Vicars offered up to $3 million in credit support to Oroton in June as it underwent the strategic review, led by investment bank Moelis & Co.
Gazal Corporation, the listed wholesaler of Calvin Klein, Tommy Hilfiger, Van Heusen and Pierre Cardin apparel in Australia, bought 7.3 per cent of Oroton in July.
A privatisation bid by the Lane family or Mr Vicars, or a takeover from Gazal, were all floated as possible outcomes from the review.
The company had net debt of $5.4 million at the end of FY17, and a market capitalisation of $18.3 million at its last share price. Only 31 per cent of its shares were in free float.
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