Patisserie Valerie wins rescue backing from private equity firm

Scandal-hit Patisserie Valerie has been rescued in a £13m management buyout backed by Irish private equity firm Causeway Capital Partners.

The cake chain confirmed this morning that Causeway Capital Partners had struck a deal with Patisserie Valerie's administrators in a move that is set to save 2,000 jobs and 96 of the firm's remaining branches.

Retail and distribution firm A.F. Blakemore & Son has acquired the remaining 21 stores under Patisserie Holdings's brand Philpotts.

Patisserie Valerie's portfolio has been sold to Dublin-based Causeway Capital and A.F. Blakemore for a total of £13m, comprising £10m cash and £3m deferred consideration.

Turnaround specialist and ex-Tulip boss Steve Francis will continue in his role as chief executive.

Shareholder Paul Mumford at Cavendish Asset Management, which injected £100,000 into Patisserie as part of its emergency £15m rescue package, told City A.M.: "There is still a danger of the company being put into liquidation. What we really want to see is shareholders getting their money back."

Mumford said that Luke Johnson held a conference call with shareholders earlier in the week that lasted for three-quarters of an hour, but "there was no inkling whatsoever that this sort of thing would be going on".

Mumford added that he is hoping Johnson will stay on in the wake of the deal: “He [Johnson] came across as being very honourable after he did the right thing when he rescued them at short notice.”

Patisserie Valerie said that "current employees working in the business, totalling approximately 2,000, will transfer to a new corporate entity operating the Patisserie Valerie business with their existing employment rights and benefits honoured."

Causeway Capital’s Matt Scaife said: "Patisserie Valerie is heritage brand, much loved by its loyal customers. This investment should mark the end of a turbulent period for customers and suppliers alike. We are delighted to partner with the team and look forward to helping the business return to growth."

Patisserie Valerie's new boss Steve Francis added: "We are delighted to welcome Causeway Capital as our partners in Patisserie Valerie, ending a disruptive period of uncertainty for the business. The affection and loyalty for the brand among our customers and employees, and Causeway Capital’s enthusiasm and support for the business, creates for us the foundations for an exciting future for the business."

Causeway Capital currently owns some cafes within its portfolio, including BB Bakers & Baristas, which controls 65 stores in the UK and Ireland.

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"Strong interest has also been received for Baker and Spice and an update will be provided shortly," Patisserie Holdings said today. "Following the loss of its nominated adviser and the appointment of administrators the Company is provisionally scheduled for cancellation with effect from 7:00am on 25 February."

The news, first reported by the Telegraph, comes after Sports Direct owner Mike Ashley withdrew a surprise bid for the food retailer earlier this week.

Last month Patisserie Valerie collapsed into administration in the wake of an accounting scandal which left the chain without enough finance to pay off its debts.