Suspended Patisserie Valerie Opportunity

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Suspended Patisserie Valerie Opportunity?

Cash injection saves Patisserie Valerie

Patisserie Valerie has been pulled back from the brink of collapsing by entrepreneur Luke Johnson, who has provided the company with a £20 million loan.

£10m Over Three Years

Mr Johnson, who currently owns 37% of the company, has agreed to provide £10 million for a three year period, which is set to provide the firm with immediate liquidity.

In addition, he has also offered a further £10 million as a bridging loan to cover any immediate shortfalls or unbalanced budgets.

In addition to this £20 million, Patisserie Valerie has also raised another £15 million by issuing new shares.

Accounting Irregularities

Since early October, the company has been fighting for survival after it was widely reported that the firm had uncovered severe and potentially illegal accounting irregularities.

For his part in the story, the company’s financial director, Chris Marsh, was arrested and has subsequently been released on bail.

The Serious Fraud Office announced that it had opened a criminal investigation into Mr. Marsh, but is unable to give any other information about the case at this present time.

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Patisserie Holdings

Patisserie Holdings is the parent company of Patisserie Valerie and four other firms, with Patisserie Valerie being by far the biggest and most well known of these. It currently has 206 stores across the UK and employs over 2,500 people.

Mr. Johnson first invested in Patisserie Valerie back in 2006 and is known for investing in a wide variety of companies, including Pizza Express, Majestic Bingo, and the swimming firm Zoggs.

Recovery Play, Dead Cat Or Falling Knife?

Although the company has been struggling over the past few weeks, with shares being suspended from trading (at 429p per share), experts have suggested that Mr. Johnson would not have injected such a large amount into the company should it be on the verge of collapse.

Combined with the additional money raised through selling shares, the £35 million should give the company enough money to cover any immediate shortfall, as well as restore any damage done to the brand’s reputation after Mr. Marsh’s alleged financial irregularities.

Patisserie Holdings announced that shares would be able to continue trading again once the new share issue and loans had taken effect, and this would be completed as quickly as possible.

Suspended Patisserie Valerie Opportunity?

Wednesday 10 October 2020 17:03, UK

The owner of Patisserie Valerie has suspended trading in its shares amid an inquiry into potential fraud and also revealed that its main subsidiary was being pursued for more than £1m by tax authorities.

The announcement on Wednesday morning followed a story by Sky News hours earlier that Patisserie Holdings was investigating a multimillion-pound hole in its accounts that could exceed £20m.

In a later statement, the company disclosed that it had just become aware of a winding-up petition that had been filed against is main subsidiary, Stonebeach, relating to £1.14m owed to the UK tax office, HM Revenue and Customs.

It said it was in touch with HMRC “with the objective of addressing the petition”.

The company revealed in its initial statement that on Tuesday the board had “been notified of significant, and potentially fraudulent, accounting irregularities and therefore a potential material misstatement of the company’s accounts”.

It added: “This has significantly impacted the company’s cash position and may lead to a material change in its overall financial position.

“As a result the company has requested that its shares be suspended from trading on AIM while it conducts a full investigation with its legal and professional advisers into its true financial position.

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“In the meantime Chris Marsh, the chief financial officer, has been suspended from his role.

The ‎situation creates a huge headache for Luke Johnson, one of Britain’s best-known and most successful entrepreneurs, who is Patisserie Holdings’ executive chairman and largest shareholder.

He bought a 70% stake in the business in 2006 and his current 37% holding was worth approximately £200m ahead of the suspension in trading.

Mr Johnson is a serial entrepreneur who has enjoyed huge success with restaurant chains including Pizza Express – and this year, he has tried to engineer takeovers of others such as Gaucho, which collapsed into administration during the summer.

He said of the company’s inquiry: “We are all deeply concerned about this news and the potential impact on the business.

“We are determined to understand the full details of what has happened and will communicate these to investors and stakeholders as soon as possible.”

Patisserie Holdings, run by chief executive Paul May, last reported group revenue in the half-year to 31 March of £60.5m – a rise of 9.1%.

Pre-tax profits came in at £11.1m, an increase of 14%.

Patisserie Holdings trades from more than 200 stores.

Patisserie Valerie saved by cash injection

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Patisserie Valerie has been saved from collapse after entrepreneur Luke Johnson, who owns 37% of the company, provided £20m in loans to the struggling chain.

Mr Johnson agreed to lend £10m for three years to owners Patisserie Holdings plc, which the company said would provide “immediate liquidity”.

He has also provided a further bridging loan facility of up to £10m.

The firm said it had also raised another £15m by issuing new shares.

The directors said the company had required an immediate cash injection of no less than £20m, without which it could not continue trading in its present form.

The cafe chain has been fighting for survival after revealing on Wednesday it had uncovered “significant, and potentially fraudulent, accounting irregularities”.

On Friday, the company said its finance director Chris Marsh had been arrested and released on bail.

The Serious Fraud Office said it had “opened a criminal investigation into an individual”.

“We can give no further information or comment at this time,” the SFO said, without naming the individual.

Patisserie Valerie’s shares were trading at 429p before they were suspended on Wednesday.

Patisserie Holdings

  • It has five brands: Patisserie Valerie, Druckers – Vienna Patisserie, Philpotts, Baker & Spice and Flour Power City.
  • Now, there are 206 stores across the chain and more than 2,500 staff as of May 2020.
  • It was floated on the AIM stock market, for smaller companies, in 2020.
  • The first Patisserie Valerie café was opened on Frith Street in London’s Soho district in 1926.
  • In 1987 the Scalzo family bought the Old Compton Street store and ran the business.
  • In 2006, Luke Johnson’s Risk Capital Partners bought a majority stake when it had eight stores.

Mr Johnson, who invested in Patisserie Valerie in 2006, is a serial entrepreneur who is best known for taking control of Pizza Express in 1993 before selling out in 1999.

In 2001 he co-founded Risk Capital Partners, which owns stakes in companies including Majestic Bingo and swimming goods firm Zoggs.

Patisserie Holding’s directors said in a statement that once the share issue and loans had taken effect, the company would be able to continue trading in its present form “for the foreseeable future”.

“Following the initial investigation, the directors can confirm that the group has net debt of approximately £9.8m,” the statement said.

However, it added that shareholders should be aware that investigations into the company’s “financial irregularities” were at “a very preliminary stage”.

The statement also said that the irregularities were also likely to have affected the historical financial statements of the company.

In its most recent results statement in May, the firm said it had cash reserves of £28.8m.

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