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Oroton collapses into administration

Business

Oroton stores will operate as usual despite the 79-year-old Australian luxury handbag retailer collapsing into voluntary administration.

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The company says it has been unable to find a viable option for recapitalising or selling the business following a seven-month strategic review.

Interim chief executive Ross Lane, the grandson of Oroton founder Boyd Lane, said there was no other solution that could achieve a better outcome than voluntary administration.

“The board is disappointed that it has had to take this step after running such a comprehensive process,” he said in a statement to the ASX on Thursday.

“However, having carefully considered the options available to the company at the conclusion of its strategic review, it is apparent that voluntary administration is necessary to protect the Oroton business and the future of this iconic Australian brand.”

The group’s 62 Oroton stores across Australia, New Zealand and Malaysia, which employ about 550 staff, will continue to operate as administrators from Deloitte Restructuring Services look at recapitalising or selling the brand.

A spokeswoman for Oroton declined to comment on media speculation that the public company will be taken private by either the Lane family, which have a 22 per cent stake, or by fund manager Will Vicars, which has an 18 per cent stake.

Entities controlled by Vicars entered a put and call arrangement with Westpac to secure critical credit support for Oroton in August.

Oroton sank to a $14.3 million loss in the year to July 29, compared to a $3.4 million profit the previous year.

Contributing to the loss were costs linked to its wind-down of its Gap franchise after it terminated an agreement with the US apparel group.

But the Oroton brand has been suffering a decline in sales in recent years, including a six per cent fall in key like-for-like sales during 2016/17.

The group’s shares, which have been suspended, last traded at 43.5 cents.

The company’s December 1 annual general meeting has been postponed to a date yet to be advised, while the first creditors meeting is set for December 11.

– AAP

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