Patisserie Valerie has been rescued from the brink of collapse thanks to a cash injection from its entrepreneur chairman.
According to reports, Luke Johnson, who owns 37% of the cafe chain, has offered £20m in loans, agreeing to lend £10m for three years to owners Patisserie Holdings plc and a further £10m bridging loan.
The chain was left struggling after revealing this week that it had uncovered “significant, and potentially fraudulent, accounting irregularities.”
On Friday, its finance director, Chris Marsh, was arrested and released on bail with the Serious Fraud Office (SFO) confirming it had “opened a criminal investigation into an individual.”
The SFO has not confirmed the name of the individual it is investigating, commenting “we can give no further information or comment at this time.”
In order to remain trading, the directors of the company said it needed a cash injection of no less than £20m. In addition to Johnson’s loan, the firm has also raised another £15m by issuing new shares.
In a statement, Patisserie Holdings confirmed that once the share issue and loans take effect the company would be able to continue trading “for the foreseeable future”.
The statement confirmed that the group has a net debt of “approximately £9.8m” and said shareholders should be aware investigations into financial irregularities were at “a very preliminary stage”.
Any irregularities in the firm’s accounting are likely to have affected historical financial statements including the firm’s most recent financial results in May noting cash reserves of £28.8m.