Patisserie Valerie boss Luke Johnson has dug deep to keep the crisis-hit cake shop chain afloat, agreeing to provide loans of up to £20mln.
On top of that, parent company Patisserie Holdings PLC (LON:CAKE) is also raising a further £15mln through a share placing, which will see it issue new stock at 50p a share – a steep discount to the 429.5p they closed at before Wednesday morning’s suspension.
Reports earlier on Friday suggested that Johnson wasn’t in a position to provide any finance to the struggling company.
But the renowned entrepreneur has stepped up, agreeing to provide a three-year £10mln loan for which he will receive no interest or fees, as well as a bridging facility of up to £10mln which will tide the company over until the proceeds of the placing have arrived.
With the much-needed money now secure, the AIM-listed firm said it would be able to continue trading “for the foreseeable future”.
Earlier this week, Patisserie warned it needed a “fresh injection of capital” if it wanted to avoid going under after finding a ‘black hole’ in its accounts.
Chief financial officer Chris Marsh was immediately suspended, and he was arrested on Thursday evening on suspicion of fraud by false representation.
The company has said this afternoon that the company’s accounts and cash position were “mis-stated and subject to fraudulent activity”.
An investigation into the books is ongoing, but Patisserie estimates that it has a current net debt position of around £9.8mln, compared to a net cash position of £28.8mln which it reported in its half-year results.
Bosses also estimate that annual revenue and EBITDA, before exceptional one-off costs, for the year ending 30 September 2019 will be approximately £120mln and £12mln respectively, although these figures are based on limited work carried out so far.
“Moreover, shareholders should be aware that the investigations into the company's financial irregularities remain at a very preliminary stage,” read the latest statement.
“Any further findings of financial irregularity within the group could result in yet further material losses for the Company, its shareholders and wider stakeholders.”