Australian luxury handbag label Oroton rescued by Caledonia Funds Management

The struggling luxury handbag retailer has been saved by the bell: a fellow Australian wealth fund manager has rescued Oroton from the administration, throwing some light into the ailing Australian retail sector.

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

Caledonia Funds Management chief investment officer Will Vicars has led the deal, according to ‘The Australian’, agreeing with administrators to a tentative proposal to buy the retailer.

Caledonia Funds’s investment allows Oroton to keep trading

The reported deal will ensure Oroton keeps operating, although it opens the doors to a radical change, as the new setup puts an end to an 80-year ownership by its founders, the Lane family.

Deloitte, acting as Oroton’s voluntary administrator, announced Tuesday that entities controlled by Vicars would take ownership of the business through a binding ­implementation deed. The latter covers the whole business and ensures a continuation of its operations, explained company’s sources.

Although administrators did not give full details of the proposed scheme or how much creditors could expect to receive, they said the returns would be disclosed in the deed of company arrangement if one were put forward.

“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,” Administrator Vaughan Strawbridge said, adding that despite interest, there was no other offer that would have resulted in a better outcome for the business or its employees. Strawbridge added that “Entering into this agreement is an important first step in implementing a recapitalisation of Oroton and we will work hard to complete the proposal.”

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

Oroton has more than 70 stores across Australia, New Zealand and Malaysia.

It’s worth recalling that Oroton’s stock was put in a trading halt a month ago before the administrator was appointed on November 30.

Image: Oroton Web