Oroton Group Ltd Up For Grabs

Oroton Group’s board says it has decided it’s now appropriate to commence a “formal process” in response to the interest received to explore these options. It says it will now invite additional parties to participate in the “strategic process.”

In a company statement, Oroton said: “numerous parties have expressed interest in exploring certain strategic options, which may involve a sale, refinancing debt facilities or recapitalization of the company.”

Oroton says the strategic process will focus on maximising value for the company and its stakeholders, however stating it is too early to comment in detail on potential structures, terms and outcomes.

In its announcement, Oroton said that “market conditions remain competitive and challenging”. Global newcomers including Coach, Michael Kors, Furla and Marc Jacobs have undoubtedly played a role in Oroton’s new “strategic process.”

Putting more pressure on the retailer is its lack of funding. Oroton Group’s $35 million facility with Westpac, it’s primary lender for more than 50 years, expires in April 2018, and it’s unclear whether this will continue with the company confirming its still in talks in terms of that facility.

Given the Oroton’s steep decline in share value, falling 53% this year, with warnings earnings would fall 75% this year, it’s possible that Westpac won’t want to continue with Oroton, which may be why one of its primary shareholders, Will Vicars, lent it $3 million, in order to support its bank facility with Westpac.

Eighty years ago, Boyd Lane founded the brand, which began as a textile design company. Now the Lane family owns a majority 21% shareholding in the company, along with close associate Caledonia Funds CIO, Will Vicars, who owns 18%. Any new moves could see them dilute their shareholdings or even make a complete exit from the company.

In April this year, Oroton Group had a double blow, when CEO Mark Newman resigned abruptly following a 52% fall in the company’s first half-year profits, with the founder’s grandson stepping into the role.

Oroton also saw an 11% slump in sales as well, compared with the same period last year. The company’s minority shareholders are said to have been worried about the health of the brand, wanting to gain shareholder control to take the business in an alternate direction.

The Group has been trying to steer the brand towards a younger demographic, with its 30% acquisition in personalised accessories brand The Daily Edited (TDE), earlier this year, in hopes the partnership will open it to a younger market segment and accelerate its online offering further.

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