Patisserie Valerie races to seal rescue deal
Chairman Luke Johnson provides £20m in loans as cafe chain’s former finance chief is arrested
STRICKEN cafe chain Patisserie Valerie raised £15.7m from institutional investors yesterday as it battled to stave off collapse after its finance director was arrested by police on suspicion of fraud.
Luke Johnson, the Aim-listed company’s executive chairman and largest shareholder, declared “we have rescued the business” after he personally came up with £20m in loans.
“The money will flow into the business in the coming days,” he told the Press Association. “I spent 12 years involved with this business, we’ve employed 2,800 staff and rescuing it has essentially saved those jobs and I believe it has a strong future,” he said.
The chain’s parent company Patisserie Holdings, whose shares were trading at 429.5p before they were suspended on Wednesday, placed 31.5m new shares with institutional investors at 50p a piece yesterday. The news however angered some smaller shareholders. Richard Bernstein, manager of the activist investor Crystal Amber, said in a tweet last night that it “takes the biscuit”, complaining that smaller shareholders, who “now will suffer big dilution” were excluded from the deeply discounted share sale.
Mr Johnson promised a £10m bridging loan to help the company pay off urgent tax bills and continue trading, which will be repaid from the proceeds of the placing. He will also provide a £10m, interest-free loan to support the company over the next three years.
The rescue plan emerged after the Serious Fraud Office formally opened an investigation. Chris Marsh, finance director of parent company Patisserie Holdings, was arrested on suspicion of fraud and released on bail on Thursday. Hertfordshire Police said: “A 44-yearold man from St Albans has been arrested on suspicion of fraud by false representation.”
The SFO confirmed that “its director has opened a criminal investigation into an individual”.
The company suspended Mr Marsh earlier this week after it discovered a “potentially fraudulent” accounting mis-statement. It subsequently told investors it had also become aware of a “winding-up” order from HMRC relating to an unpaid tax bill of £1.14m.
Patisserie Valerie also revealed yesterday that it needed at least £20m to keep trading and that it had net debt of £9.8m, rather than the net cash it had previously reported. In its trading update the company said it expects its revenue for the year to Sept 30 to be approximately £120m.
However, Patisserie Valerie cautioned these figures “cannot be verified until there has been further work including the re-audit” of its results.
In a move suggesting that shares could resume trading next week, the company said that 10m of the new equity would be admitted to Aim on Thursday. Existing shareholders will need to approve the rest of the increase in capital at a meeting next month.