Shareholders call for cull of board at Patisserie Valerie
PATISSERIE VALERIE will face demands for “wholesale” boardroom changes and questions over “collusion” between executives at a crunch shareholder meeting on Friday.
Shareholders are due to vote on a fundraising package needed to rescue the business, after a £40m black hole was uncovered in its accounts. A conditional placing of 20 million shares requires the approval of 75pc of investors.
While only one motion has been tabled, shareholders will be expecting answers after being furnished with only limited details on a crisis that has taken the Aim-quoted company to the brink. “What has come out since looks grubbier and grubbier,” one of Patisserie Valerie’s leading institutional investors told The Sunday Telegraph.
“We would be surprised if the CEO stays. Someone is going to have to fall on their sword,” the investor said. “Ultimately they need to put three new people in place. A new chairman, a new CEO and a new CFO. Our view is there needs to be wholesale change or management or board independence has to be strengthened, so we have reassurance this will not happen again.”
Patisserie Valerie, which had seemingly avoided a broader high street malaise, shocked staff, customers and investors earlier this month by revealing “significant, potentially fraudulent accounting irregularities”. Majority shareholder and executive chairman Luke Johnson, two-thirds of whose vast wealth was tied up in the company, plugged a cash hole days later, committing £20m of secured loans.
With shares suspended, the finger has been pointed at long-term finance chief Chris Marsh. On Friday he quit having initially been temporarily removed from office. Police have also arrested and questioned Mr Marsh.
A winding-up petition by HM Revenue & Customs was last week withdrawn, removing an immediate threat that would have otherwise seen liquidation proceedings started within days. But further questions were raised about Patisserie Valerie’s corporate governance after it admitted to having handed out three times as many share options to Mr Marsh and chief executive Paul May than had been disclosed.
Executive chairman Luke Johnson has plugged the cash hole at the company by committing £20m of secured loans