Patisserie Valerie was three hours from collapse before rescue deal struck, chairman says

Shareholders have voted to approve rescue deal but accused management of 'holding a gun to our heads' with plan

Patisserie Valerie was just three hours away from collapse when chairman Luke Johnson stepped in to rescue the bakery chain after financial irregularities were uncovered last month.

The group suspended trading on the London Stock Exchange in October following reports of a black hole in its accounts. The firm’s finance chief, Chris Marsh, was arrested on suspicion of fraud, but was later released and subsequently left the group.

It was feared that the cafe company would collapse, which would have put thousands of jobs at risk, if an “immediate injection of capital” was not found.

The group was saved from closure after Mr Johnson agreed to lend the business £20m as part of a rescue deal.

Shareholders voted on that deal at a meeting held on Thursday, with the vast majority of votes in favour of the share placing required to carry out the rescue process.

However, investors accused Mr Johnson and his management team of “holding a gun to our heads” with their plan, and said the placing would dilute their stakes in the company.

“Why should the new shareholders benefit from buying shares at a discount?,” said one shareholder.

Mr Johnson defended the rescue plan and warned shareholders that if the fresh funds were not approved "the company risks going into administration".

He told investors at the meeting that the emergency fundraising in October had been enacted when the firm was just "three hours" away from going bankrupt.

"Quite a few companies in our situation aren't saved, they go into administration," he said.

Mr Johnson also said that he had made a personal commitment to reduce his involvement in other businesses and focus on Patisserie Holdings - he is the chairman of Gail's Bakery parent Bread Holdings and Brighton Pier Group, and backs a number of other ventures through his investment vehicle Risk Capital Partners.

Additional reporting by newswires