Entrepreneur loans Patisserie Valerie £20m as cake shop issues shares to cover financial black hole
Patisserie Valerie today confirmed it needs an immediate cash injection of £20m to continue trading as it revealed that historical trading updates were incorrect.
The news comes hours after a criminal investigation was launched into potential fraudulent activity at the beleaguered bakery.
Read more: Patisserie Valerie finance director arrested as fraud probe launched
The cake shop is proposing to raise £15m through the issue of 30m ordinary shares, it announced this afternoon.
Most of the money raised will be used to repay a £10m bridging loan from executive chairman and 37 per cent shareholder Luke Johnson today, designed to give the firm immediate liquidity.
Meanwhile Johnson will provide a separate three-year £10m loan to the company.
This afternoon's announcement came as it emerged that stores had begun to close.
A branch in Edgware Road has been shut down over a breach of the lease, Bryan Madagan solicitors acting on behalf of landlord Grovemoor Estates confirmed this afternoon.
Another London branch in Kings Mall, Hammersmith was also shut today, days after the company revealed it needed an immediate cash injection to survive.
A spokesperson for landlord MP Kings Retail SARL commented: “We have taken possession of the unit on King Street in question. We are sorry to see the store close but have been forced to act given the tenant was in breach of their lease agreement.”
This morning the company announced that suspended financial officer Chris Marsh was arrested last night.
Hertfordshire Police confirmed that a 44-year-old man was arrested on suspicion of fraud by false representation and released under investigation yesterday evening. Police were not able to confirm the name.
Meanwhile, a criminal investigation is being led by the Serious Fraud Office.
Marsh was suspended on Wednesday after the high street cake shop revealed it had been notified of "significant and potentially fraudulent" accounting irregularities.
In a trading update yesterday afternoon Patisserie Valerie said: "The board has now reached the conclusion that there is a material shortfall between the reported financial status and the current financial status of the business.
"Without an immediate injection of capital, the directors are of the view that that is no scope for the business to continue trading in its current form."
The board said it had become aware of a winding up notice issued against its principal trading subsidiary Stonebeach relating to £1.14m of unpaid tax.
Read more: Patisserie Valerie facing closure without immediate cash injection