OROTON RESCUE DEAL IN THE BAG

AILING fashion chain Oroton has been salvaged in a deal spearheaded by a wealthy fund manager.

Caledonia Funds Management chief investment officer Will Vicars has ridden to the rescue of the retailer, agreeing with its administrators to buy the business.

It will ensure Oroton keeps operating but ends a near 80year period of ownership by its founders, the Lane family.

Deloitte, acting as Oroton’s voluntary administrator, announced yesterday that entities controlled by Mr Vicars would take ownership of the business through a binding implementation deed.

The deed covers the whole business and ensures a continuation of its operations. Oroton has more than 70 stores across Australia, New Zealand and Malaysia.

Shares in Oroton were put in a trading halt a month ago before the administrator was appointed on November 30.

“Importantly the proposal would allow Oroton Group to remain trading and avoid a break- up of the business to the detriment of employees, creditors and other stakeholders,’’ Oroton said in a statement to the ASX.

Administrators did not give 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 were put forward.

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 of almost 19 per cent.

Before Oroton’s collapse in November, he extended the offer of a $ 3 million credit facility to the retailer 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, stretching 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.

Before the failure of the chain last month, the Lane family was Oroton’s biggest shareholder with a stake of slightly more than 21 per cent.

Ross Lane was Oroton’s interim chief and managing director when it collapsed.

In a statement last month, Mr Lane said directors were disappointed they had to put the group in administration, but had to act to “protect the Oroton business and the future of this iconic Australian brand”.

Shares in the group last traded at 43.5¢ and had lost more than 80 per cent of their value in the past year.

At that price, the group had a market value of $ 18 million.

Oroton’s rescue will give some much- needed confidence to Australia’s $ 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.