Patisserie Chairman Pledges $26 Million to Rescue Cake Chain
(Bloomberg) -- Patisserie Holdings Plc Chairman Luke Johnson proposed lending the troubled U.K. cake-shop owner 20 million pounds ($26.3 million) to stave off collapse amid a deepening accounting scandal.
The owner of Patisserie Valerie expects to enter into a 10 million-pound loan agreement with Johnson, who also holds a 37 percent stake, it said in a statement Friday. The chairman will also commit to a further 10 million-pound bridge loan, the company said.
The company proposed raising another 15 million pounds through the issue of 30 million shares at a price of 50 pence a share. The stock last traded at 429.50 pence earlier this week, before it was suspended Wednesday.
The placement would increase the number of shares outstanding, meaning existing investors would face dilution of their holdings. A conditional portion of the placement, representing two-thirds of the proposed new shares, is subject to approval by shareholders, which the company said it will seek at a general meeting.
Patisserie Holdings said it requires an immediate cash injection of no less than 20 million pounds. Earlier Friday the company said finance chief Chris Marsh was arrested as U.K. fraud prosecutors opened a probe into the accounting scandal, disclosed on Wednesday.
“Historical statements on the cash position of the company were misstated and subject to fraudulent activity and accounting irregularities,” Patisserie Holdings said. Previous financial statements will have to be revised, it said, adding that the company has 9.8 million pounds of net debt.
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