BAKERY chain Patisserie Valerie has been bought out of administration – saving nearly 2,000 jobs.
Here’s what we know about the embattled cake shop.
What is Patisserie Valerie’s share price?
Trading was suspended in Patisserie Holdings shares on the London Stock Exchange in October.
On October 10, 2018, trading closed at 429.5p a share.
As of February 14, 2019 the share price had not changed.
The company’s future was thrown into jeopardy following the discovery of a major black hole in its accounts.
HMRC launched a winding-up petition against a subsidiary over an unpaid tax bill of more than £1million.
Bosses then discovered £10m in “secret” bank overdrafts.
Chairman Luke Johnson, Patisserie Holdings’ largest shareholder with a 37 per cent stake, called the discovery a “bombshell”.
He claimed to have saved the company from collapse on October 12 with a £20million loan.
In May, the firm said it had £28.8million in cash reserves after pre-tax profits rose 14.2 per cent to £11.1million.
Revenue climbed 9.1 per cent to £60.5million, it said at the time.
On January 16, 2019, Patisserie Holdings plc said that following the announcement on October 10, 2018, which concerned evidence of a possible fraud, and an emergency fund raising, the Company has appointed a new CEO, a new interim CFO, a new non-executive director, a new commercial director and a new production director, as well as other management appointments.
But on January 22, 2019, its cafe chain Patisserie Valerie collapsed into administration, but was saved on February 14, 2019.
How was the company saved?
Investment firm Causeway Capital agreed to take over 96 shops.
In a separate deal, food wholesaler A.F. Blakemore & Son has picked up all 21 Philpotts stores and an announcement regarding Baker & Spice will be made imminently.
The chains had fetched £13m, which is a fraction of what the group was once worth.
Steve Francis, Patisserie Valerie’s chief executive and is leading the management team buy-out, said the move would end “a disruptive period of uncertainty for the business” and be the start of “an exiting future”.
Matt Scaife, a partner at Dublin-based Causeway Capital, said: “Patisserie Valerie is heritage brand, much loved by its loyal customers. This investment should mark the end of a turbulent period for customers and suppliers alike.”
How many job were at risk?
On January 22, it was revealed the company has gone into administration, putting more than 3,000 jobs at risk.
The chain has more than 200 stores across the UK.
In January, the firm said the extent of fraud meant it was unable to renew its bank loans with HSBC and Barclays and it did not have sufficient funding to continue trading, leaving it with no option but to appoint KPMG as administrator.
KPMG has already closed 70 stores, resulting in 920 redundancies.
The firm said discussions with its lenders HSBC and Barclays to extend a standstill agreement on its debts had failed, leaving it with no option but to appoint KPMG as administrator.
Claims of fraudulence significantly affected the company’s cash position in October 2018, with the firm saying it could lead to a “material change” in its overall financial position.
The cafe chain’s parent company Patisserie Holdings admitted it would cease trading unless it got an “immediate” cash injection.
But within just a few days, chairman Luke Johnson revealed he had stumped up personal loans of £20million to save the firm from collapse.
The company also raised almost £15million in a share issue, which would repay half Mr Johnson’s loan and cover the tax bill and other debts.
But in January 2019 it emerged that the alleged fraud could be even worse than thought.
The company said in a statement on January 16: “The work carried out by the company’s forensic accountants since (October) has revealed that the misstatement of its accounts was extensive, involving very significant manipulation of the balance sheet and profit and loss accounts.
“Among other manipulations, this involved thousands of false entries into the company’s ledgers.
“It will take some time before a reliable trading outlook can be completed while the above work streams progress.
“The initial indications from the work carried out to date is that the cashflow and profitability of the business has been overstated in the past and is materially below that announced in the trading update on 12 October 2018, which was based on limited work carried out over a 48-hour period.”
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Why was finance director Chris Marsh arrested?
The bakery chain’s finance chief was arrested on October 12, just days after he was suspended from his role.
In a statement, Hertfordshire Police said: “A 44-year old man from St Albans has been arrested on suspicion of fraud by false representation. He has been released under investigation.”
Marsh was bailed with no charges as the Serious Fraud Office (SFO) probes a £40m black hole in Patisserie’s accounts.
Marsh resigned from his role on October 26, 2018.
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