£180m humbling of the cake shop tycoon

Entrepreneur faces huge loss at fraud-hit Patisserie Valerie

HUMBLED entrepreneur Luke Johnson has suffered a £183m loss after his scandalhit cake chain Patisserie Valerie was rescued by an Irish private equity firm.

The company, left reeling after an alleged fraud by its former finance director, was sold by administrator KPMG to Causeway Capital following talks that lasted until 3am yesterday.

Around 2,000 jobs have been saved, and 96 Patisserie Valerie cafes will stay open.

But it is a devastating blow for executive chairman Johnson, 57, pictured, most of whose £260m fortune was tied up in Patisserie Valerie.

He had a stake worth £170m on the day the fraud was revealed to the market in October, leading to an immediate suspension of trading in its shares.

Chris Marsh, who was finance director at Patisserie Valerie at the time the scandal erupted, was arrested shortly after and subsequently released on bail. The value of Johnson’s stake has now been wiped out, rendering stock worthless. He also ploughed £10m into the business to keep it afloat, and an extra £3m to pay staff their January wages after it had to call in administrators.

It is thought little of this money will be recovered. The wipeout means Johnson may have lost almost two-thirds of his wealth.

KPMG raised £13m from the rescue deal, which will be used to repay creditors. Dublin-based Causeway, which owns BB Bakers and Baristas – with around 65 sites in the UK and Ireland – has taken on all Patisserie Valerie stores that remain open. Another 21 Philpotts cafes which also belonged to the collapsed group, have been rescued by retail and wholesale firm AF Blakemore & sons, which owns 280 spar stores across the UK.

Johnson’s other investments include Brighton Pier Group, where shares have more than halved in a year, and luxury hospitality firm Elegant Hotels.

He is also chairman of Risk Capital Partners which owns bakery chain Gail’s.

Johnson said last night: ‘ I’m pleased that Patisserie Valerie has been saved and the cloud of uncertainty lifted for its 2,000 employees. While I’m naturally deeply disappointed at the events that led us to this point, I wish the company well.’

It is a dramatic reversal of fortune for the Oxford graduate, one of Britain’s best- known entrepreneurs and a former chairman of Pizza Express, Royal society for Arts and Channel 4.

A self- proclaimed business guru, he has pontificated extensively on the subject of fraud.