Tempers flare at meeting to get approval for emergency fundraising as part of £25m rescue package
Patisserie Valerie is seeking shareholder approval to offer heavily discounted shares only to institutional investors. Photograph: Lauren Hurley/PA
Patisserie Valerie’s management has come under fire from angry shareholders as it sought approval for emergency fundraising at a bad tempered meeting.
One shareholder said the cake shop and cafe group was “putting a gun to our heads” and another said the decision to offer heavily discounted shares only to institutional investors as part of a £25m rescue package was “not right and in fact immoral.” Another described recent events as “a fiasco”.
Patisserie Holdings, which has more than 200 cafes and nearly 3,000 staff, has been forced to raise new cash after saying that “fraudulent activity” had been uncovered that left the business close to collapse.
The group’s multimillionaire chairman, Luke Johnson, put up £20m of his own money to keep the group in business after an initial internal investigation found that it was nearly £10m in debt instead of having £28m in the bank, as it had last reported.
On Thursday morning, the company sought shareholder approval for two share placings that will raise £15.7m, £10m of which will be used to pay back half of Johnson’s emergency loans.
Johnson said that a share placing, which involves the sale of 31.54m shares to institutional investors at 50p each, a hefty discount to the 429.5p price of Patisserie Holding’s stock when its shares were suspended last month, was “the only course of action open to the company”.
He said no other options had been put forward to shareholders because the company was “within hours of going into bankruptcy” when it agreed the placing with institutions.
Johnson thanked shareholders who had sent messages of support and said he wanted to reassure them that “management is doing everything we can to address the situation, get to the bottom of what happened and safeguard the company and its future.”
But he said: “It won’t be quick or easy but we are determined to succeed.”
Johnson said trading at the cake shop group was currently “fine” and one of two stores closed in the wake of the accounting scandal had reopened on Thursday.
He said he could not give further details about the company’s investigation into its accounting black hole as that risked prejudicing enquiries under way by authorities including the Serious Fraud Office.
The company has called in forensic accountants from PricewaterhouseCoopers to trawl through its accounts and Johnson said all the details of its findings would be laid out “once we are confident we have got to the bottom of it”.
But shareholders backed Angus Forbes, an independent shareholder, who said Patisserie Holdings should be “discussing all the options” and not rushing ahead with the heavily discounted placing which discriminated against small scale investors.
He said that if the company’s fundraising plan went ahead he would “want the company to go to hell” but if it offered all shareholders an equal chance to put money in then it would be “an act of solidarity”.