Australia's Oroton files for bankruptcy
today Nov 30, 2017
Australia is a very volatile retail market right now. And the iconic accessories brand Oroton, and its owner OrotonGroup, has become the nation's latest victim.
But it wasn't unexpected. In June, OrotonGroup appointed investment bank Moelis & Co to conduct a strategic review and consider other options including a sale, a capital raising or refinancing of debt facilities after receiving approaches from potential buyers. The rescue attempt appears to have failed.
OrotonGroup said on Thursday the handbag brand has finally gone into administration, after a months-long rescue plan failed to find a secure trading future in Australia.
Administrators Deloitte Group have been officially appointed to carry out the bankruptcy act, with all 59 stores remaining open to trade ahead of Christmas at least, said the company in a press release.
After a trading halt went into effect on Tuesday, OrotonGroup dropped the bombshell to traders early Thursday, with interim chief executive Ross Lane saying the group is "disappointed" by the decision to enter administration.
"The board is disappointed that it has had to take this step after running such a comprehensive process," Lane said, to local media.
"However…. it is apparent that voluntary administration is necessary to protect the Oroton business and the future of this iconic Australian brand."
Moving forward, Deloitte personnel will work on the continuation of usual trade, in the hope of securing a sale of the company, recapitalisation or a complete group restructure.
"Our ambition is that a stronger Oroton business will emerge from this process," Deloitte told the Sydney Morning Herald.
It's been a shifting twelve months for OrotonGroup. In July, Gazal Corporation, the official wholesaler of Calvin Klein, Tommy Hilfiger, Van Heusen and Pierre Cardin apparel in Australia, bought 7.3 per cent of Oroton from shareholder Highclere. The company's stock is also held by fund manager Will Vicars, of Sydney-based firm Caledonia, owning 18.2 per cent of shares. The other majority stakeholder is the Lane family, founders of Oroton in 1938, who hold 21 per cent of the company's shares.
In August, the local operator of Gap severed ties with the US retail giant, closing the six stores, saying it wanted to refocus its operations on its namesake Oroton handbag brand.
Oroton has suffered falling sales in recent years and racked up a $14.2 million loss in 2017.
The news follows a slew of Australian fashion retailers to collapse over the past 18 months, with Marcs, David Lawrence, Herringbone, Rhodes & Beckett, Payless Shoes and Pumpkin Patch all going under.
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