Oroton’s administrator has accepted a purchase proposal from its largest shareholder that will keep the luxury handbag retailer trading and prevent a break-up of the embattled business.
Oroton says Deloittes, which was appointed administrator in November, had entered into a binding implementation deed with a company controlled by fund manager Will Vicars, who owns 18.2 per cent of the firm’s ASX-listed shares.
The administrator did not give full details of the proposed scheme or how much creditors could expect to receive, but said the returns would be disclosed in the deed of company arrangement if one is put forward.
Voluntary administrator Vaughan Strawbridge said that despite interest, there was no other offer that would have resulted in a better outcome for the business or its employees.
‘Our objective has been to avoid a break-up or closure of Oroton, preserve employment and as much of the Oroton business as is viable, whilst achieving a value maximising result for stakeholders,’ Mr Strawbridge said on Wednesday.
‘Entering into this agreement is an important first step in implementing a recapitalisation of Oroton and we will work hard to complete the proposal.’
The deal ends an era for the Lane family which has owned the business since it was founded by Boyd Lane in 1938.
The Lane family had the highest shareholder ownership, with just over 21 per cent, before the 79-year old Australian designer handbag retailer slipped into voluntary administration in late November after struggling with falling sales, a failed Gap apparel venture and a precarious debt situation.
Oroton sank to a $14.3 million loss in the year to July 29, compared to a $3.4 million profit the previous year, after the brand suffered a six per cent fall in key like-for-like sales.
The luxury retailer is only one of many bricks-and-mortar retailers to suffer financial strife in the past year, with Top Shop, Marcs, David Lawrence, Herringbone, Rhodes & Beckett and Pumpkin Patch also hit.
Shares in Oroton, which are suspended from the ASX, last traded at 43.5 cents after having fallen more than 80 per cent in the past year.