Struggling accessories retailer Oroton has been given leave by the Supreme Court of New South Wales to transfer all of the company’s issued shares to Manderrah Pty Ltd at the previously agreed value of nil, fulfilling part of the Deed of Company Arrangement (DOCA).
The retailer’s application was heard on the 27th July and saw no shareholders or interested parties object.
Oroton deed administrators, Deloitte’s Vaughan Strawbridge and Glen Kanevsky, expect to implement the DOCA by transferring the shares to Manderrah by 3rd August, despite further outstanding conditions remaining.
Strawbridge believes the DOCA will “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.”
The accessories retailer entered into the DOCA with Manderrah in April in order to secure the future of the business, which fell into administration last November due to declining sales and high rental costs.
An independent expert’s report circulated to creditors and shareholders in July set the company’s equity valuation at nil, a condition of the DOCA.
“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,” said 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.”
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