A share offer has raised £15.7m to help Patisserie Holdings continue trading in the face of a crisis sparked by serious financial irregularities.
The business announced on Friday afternoon that it was launching a share offer to raise £15m, admitting it needed a £20m capital injection to avoid calling in administrators. Hours later, it reported the share placing had raised £15.7m before expenses.
In addition, company chairman Luke Johnson is to loan the business £10m under a three-year term on an interest-free/fee-free basis, and will also provide a £10m bridging loan of up to £10m to be paid back from the share offer.
Patisserie Holdings said that, based on current information, it would be able to continue trading in its current form for the foreseeable future on completion of the fundraising.
The business, which operates more than 150 Patisserie Valerie sites and around 50 sites under other brands, has been conducting an emergency investigation after becoming aware of serious accounting issues this week.
Finance director Chris Marsh was suspended from his role on Tuesday, and has since been arrested and bailed.
In a statement issued to the Stock Exchange on Friday (12 October), Patisserie Holdings said it had a net debt of around £9.8m, adding that “historical statements on the cash position of the company were mis-stated”.
“The board believes the current financial position of the company is such that it requires an immediate cash injection of no less than £20m, without which there is no scope for the group to continue trading in its current form and would therefore need to appoint administrators,” it stated.
Based on current information, it expected annual revenue of £120m and EBITDA of £12m in the year ending 30 September 2019, but warned these figures were based on the investigative work performed to date.
Investigations into the financial irregularities were at “very preliminary stage”, and would be subject to further review in the “weeks and months to come”, it added.
“At this stage, the directors cannot predict the outcome of those investigations with any degree of certainty,” it stated, adding that further findings of financial irregularity could result in more losses for the company, its shareholders and wider stakeholders.
The company’s shares remain suspended from trading on AIM and this is expected to continue until the financial position is clearer.
Patisserie Holdings crisis timeline
10 October (AM): Share trading suspended as company launches investigation into serious accounting irregularities. Chief financial officer Chris Marsh suspended.
10 October (PM): Winding-up petition filed at the High Court relating to £1.14m owed to HMRC by Stonebeach Limited, the company’s principal trading subsidiary.
11 October: Patisserie Holdings reports it cannot continue to trade in its current form without immediate cash injection.
12 October (AM): Chris Marsh arrested by police and released on bail.
12 October (PM): Business announces plans for £15m share offer and £10m loan, admitting it needs £20m to avoid calling in administrators. Offer subsequently raises £15.7m, excluding expenses.