Investors burned in Patisserie rescue

INVESTORS in scandal-hit cake company Patisserie Valerie are set to lose nine-tenths of their money after the company’s value plunged in a rescue deal.

Parent firm Patisserie Holdings raised £16.7m by selling new shares to investors at 50p each.

Before it was rocked by fraud claims, the shares were worth 429.5p each. It means the firm’s value has plunged from almost £450m to around £67.7m in a matter of days.

Most buyers in the placing are thought to be existing investors, including executive chairman Luke Johnson, who had a 37pc stake before the stock was issued.

Johnson, 56, is also lending the business £10m for three years at no interest to help it survive.

He has provided another £10m of short-term finance to cover costs until the money raised by the share sale is available to spend. Sources said the rescue deal has guaranteed the future of Patisserie Valerie, meaning all stores will open today and no staff will lose their jobs.

The company was left reeling after it discovered a multi-million pound black hole in its accounts and warned fraud may have taken place. A petition had been issued by the tax man to wind the business up over an unpaid bill of £1.1m. Finance director Chris Marsh was suspended and has since been arrested.

Sources said that it had missed a deadline to pay large amounts of rent last month.

Stores in the London districts of Hammersmith and Edgware had notices placed in their windows yesterday saying they had been shut by landlords.

But both stores are due to open this morning.