Patisserie Valerie shareholders vent anger at management

Patisserie Valerie chairman Luke Johnson has faced down sharp criticism from shareholders as the cake chain sought backing for a rescue plan.

Mr Johnson told investors at a meeting on Thursday that the emergency fundraising in October had been enacted when the firm was just “three hours” away from going bankrupt.

“Quite a few companies in our situation aren’t saved, they go into administration,” he said.

The majority of shareholders had already backed the rescue plan as final votes were being counted after an emergency general meeting (EGM) for Patisserie Holdings, the AIM-listed parent of the cake chain.

An official announcement of the final results was expected by Thursday afternoon.

But Mr Johnson and other members of the management team, including chief executive Paul May, faced fierce criticism from investors over the company’s financial troubles.

Shareholders took aim at the emergency fundraising, which they said would dilute their current stakes in the company.

One investor accused the management of “holding a gun to our heads”.

Another said: “Why should the new shareholders benefit from buying shares at a discount?”

Mr Johnson defended the rescue plan and warned shareholders that if the fresh funds were not approved “the company risks going into administration”.

He added that he had made a personal commitment to reduce his involvement in other businesses and focus on Patisserie Holdings.

Mr Johnson is the chairman of Gail’s Bakery parent Bread Holdings and Brighton Pier Group, and backs a number of other ventures through his investment vehicle Risk Capital Partners.

Mr May has also stepped down from the board of Frankie & Benny’s owner The Restaurant Group to focus on the rescue effort.

The future of Patisserie Holdings was first thrown into question last month after it uncovered fraudulent activity around its financial accounts and was served a wind-up order by the taxman over £1.14 million owed to HM Revenue and Customs.

Mr Johnson was forced to swoop in with a rescue package that saw him pledge up to £20 million in new loans for the business.

Half the money loaned by Mr Johnson to the business will be returned to him once the £15 million worth of shares have been issued.

Directors said that an initial investigation showed that historical statements on the cash position of the company were misstated and subject to fraudulent activity and accounting irregularities.

The group’s finance director Chris Marsh was arrested on suspicion of fraud last month, but was later released. He has since left the group.