CAKE’s collapse expected to result in losses of up to £500m
The administrators of crisis-hit Patisserie Holdings have sold most of the group in three deals, saving more than 2,000 jobs.
However shareholders – who in October thought they had a piece of a profitable, expanding business worth £450m – are expected to get back crumbs for their slice of CAKE, as the company was known on the stock market.
Fraud investigations are ongoing into the group, which had undisclosed bank lending of £10m and ultimately failed despite rescue funding of nearly £30m being provided late last year.
Former chairman Luke Johnson, who has lost around £180m and his reputation as a business guru in Patisserie Valerie’s ignominious collapse, said: “I’m pleased that Patisserie Valerie has been saved and the cloud of uncertainty lifted for its 2,000 employees. While I’m naturally deeply disappointed at the events that led us to this point, I wish the company well.”
Joint administrators David Costley-Wood and Blair Nimmo, from KPMG, raised £15.5m in three deals which were completed within a 24-hour period.
Patisserie Valerie was bought by the new management team, backed by Irish private equity firm Causeway Capital, in a deal that saves 96 shops and nearly 2,000 jobs. The administrators had already closed 70 stores, resulting in 920 redundancies, when they were appointed last month.
Matt Scaife, a partner at Dublin-based Causeway Capital, said: “Patisserie Valerie is a heritage brand much loved by its loyal customers. We are delighted to partner with the team and look forward to helping the business return to growth.”
Separately, Willenhall-based retailer, wholesale and distribution company AF Blakemore & Son, which owns a string of Spar shops, has acquired all 21 Philpotts stores, employing 210 people.
AF Blakemore chairman Peter Blakemore said the deal “enhances our current retail offer and is aligned with our strategic retail and food service plan”.
The third deal resulted in the sale of Baker & Spice to the Department of Coffee & Social Affairs for a total consideration of £2.5m.
The remaining assets, which were not included in the three separate transactions, will be realised during the administrations.
Patisserie Valerie has been fighting for its survival since October when accounting irregularities were uncovered.
When the extent of fraud came to light it left the business unable to renew its bank loans, forcing it to appoint administrators.
The Serious Fraud Office is carrying out a criminal investigation into Patisserie Valerie and former finance director Chris Marsh who was arrested and released on bail.
Another key investigation is being undertaken by the Financial Reporting Council into the role of the group’s auditors Grant Thornton.
