Oroton’s equity valued at nil
Struggling accessories retailer Oroton has prepared and circulated an independent expert’s report to creditors and shareholders that sets out the valuation of the equity in Oroton, concluding that it has nil value – a conclusion that will be presented to the NSW courts.
Oroton Group has been tentatively given a July 27th court hearing to determine its future.
The struggling accessories retailer entered into a Deed of Company Arrangement (DOCA) with Manderrah Pty Ltd (Manderrah) in April, under the condition that Oroton obtain leave from the Supreme Court of New South Wales to transfer 100 per cent of shares in Oroton to Manderrah for nil consideration.
“The value of equity implied by the selected value range for OrotonGroup’s operating business is below its market capitalisation on the last trading day prior to the announcement that the Administrators had been appointed,” says the report.
“We have assumed that the more realistic scenario would be a distressed sale basis (which assumes that secured creditors would fund ongoing trading to the extent necessary to effect the sale on a going concern basis) rather than a ‘break up’ sale.
“Accordingly, on a distressed sale basis, the assessed value of OrotonGroup’s equity is nil.”
The DOCA will secure the future of the business, which initially fell into administration last November due to declining sales and high rental cost.
Administrator Vaughan Strawbridge believed the DOCA would “deliver a better outcome compared to other offers received, including the best possible financial return as well.”
“Just as importantly, a recapitalised OrotonGroup business means continued employment for staff across the operations.”