Good news for cake lovers: Patisserie Valerie saved from collapse thanks to £20m loan
PUBLISHED: 16:47 12 October 2018 | UPDATED: 17:53 12 October 2018
Patisserie Valerie has been saved from collapsing into administration thanks to a £20m loan offering from the company’s major stakeholder.
Entrepreneur Luke Johnson, who has a 37% stake in Patisserie Holdings, has offered up the funds alongside a drive to sell shares, raising a further £15m.
It has been a tumultuous week for the cake chain, which announced yesterday it discovered a “black hole” in its finances.
The company’s suspended finance officer Chris Marsh was arrested overnight for fraud, and has been released on bail as investigations continue.
The cafe has shops in Norwich, Ipswich, Colchester, and Bury St Edmunds.
In an announcement to the stock market, Patisserie Holdings said: “The company expects to enter into a new £10 million loan agreement with Luke Johnson later today, the company’s executive chairman.
“The loan is for a three-year term and made on an interest-free/fee-free basis and will be secured in due course.
“Due to the nature of the settlement period of the placing, Luke Johnson will commit a further bridging loan facility of up to £10 million, to provide the company with the ability to fund immediate outstanding liabilities.
“The company will repay the amount of the bridging loan drawn down in full immediately upon receipt of the placing proceeds.”
The proceeds from the share placement will be used to pay amounts owed to the likes of HM Revenue & Customs and trade creditors.
It has also been earmarked for “general working capital purposes and committed capital expenditure,” Patisserie Holdings said.
The company expects its key lenders to hold off from forcing the company to pay its debts for a period of 12 months by entering into “standstill agreements”.
However, that could fall apart if the share placing fails or “certain insolvency procedures are commenced against the group”.
Patisserie Holdings - which owns additional brands such as Druckers, Philpotts and Baker & Spice - trades from more than 200 stores and also has a partnership with Sainsbury’s, with branded counters present in the supermarket.
Landlords for at least two Patisserie Valerie locations in London - in Hammersmith and Edgeware Road - have cancelled their lease agreements with the company over breach of contract.