Deal will keep Oroton trading

A major shareholder will buy Oroton from administrators, keeping the fashion retailer open but ending a family’s ownership.

After a year of collapses, the Oroton deal is good news for Australia’s struggling fashion sector. Pic: AAP

Caledonia Funds Management chief investment officer Will Vicars has ridden to the rescue of failed fashion retailer Oroton, entering a deal to buy the business from its administrators.

The deal will ensure the business (ORL) keeps operating, but ends a near-80 year ownership by the Lane family.

Deloitte, acting as Oroton’s voluntary administrators, announced that entities controlled by Mr Vicars had entered into a binding implementation deed that covers the whole business and ensures a continuation of its operations.

“Importantly the proposal would allow Oroton Group to remain trading and avoid a breakup of the business to the detriment of employees, creditors and other stakeholders, and seeks to ensure a strong and stable future for the company and its stakeholders,’’ Deloitte said in a statement to the ASX.

Administrators 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. “Entering into this agreement is an important first step in implementing a recapitalisation of Oroton and we will work hard to complete the proposal.”

Mr Vicars is no stranger to the Oroton business, as he is a former director and its second biggest shareholder with a stake just under 19 per cent.

Before Oroton’s collapse in November Mr Vicars extended the offer of a $3 million credit facility to Oroton to help it during its financial woes.

The deal marks the end of the Lane family’s association and ownership of the handbags and fashion accessories company which stretches back to 1938, when the business was founded in Sydney by Boyd Lane.

The company began as an importer of luxurious European textiles for the emerging Australian fashion industry.

The Lane family was Oroton’s biggest shareholder before its failure, with a stake of just over 21 per cent.

Ross Lane was Oroton’s interim CEO and managing director at the time of its collapse.

Shares in Oroton last traded at 43.5 cents and its shares lost more than 80 per cent of their value in the last year.

The rescue of Oroton will give some much needed confidence, and good news, to the $300 billion retail sector, which has suffered from some of the worst trading conditions in decades and the collapse of dozens of high-profile retailers.

Among those names to fail this year were Pumpkin Patch, Rhodes & Beckett, Topshop, Herringbone, Marcs and David Lawrence.