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Management’s Patisserie Valerie rescue saves 2,000 jobs

The management team at coffee and cake chain Patisserie Valerie has secured backing from Dublin-based investment firm Causeway Capital to take over 96 shops.

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The deal will secure around 2,000 jobs at the chain, while sister brand Philpotts has also been sold in a separate deal, saving a further 21 stores.

 

The total value of the package is £13m, comprising £10m cash and a deferred consideration of £3m.

 

“Strong interest” has also been received for sister brand Baker and Spice, parent company Patisserie Holdings said in a statement to market.

 

In January, Blair Nimmo and David Costley-Wood from KPMG were appointed as joint administrators, while David Costley-Wood and Will Wright were appointed joint administrators to subsidiaries Patisserie Acquisition Limited, Stonebeach Limited, Philpotts Limited, and Flour Power City Limited.

 

In all, 70 of the group’s 200 stores will close, resulting in “a significant number of redundancies”, the administrators said.

 

In a statement to the London Stock Exchange at the time of appointing the administrators, Patisserie Holdings said it had been unable to renew its bank facilities, and therefore “regrettably, the business does not have sufficient funding to meet its liabilities as they fall due”.

 

It added that chairman Luke Johnson, until recently the firm’s chairman and biggest shareholder, had personally extended an unsecured, interest-free loan of £3m to help ensure that the January wages are paid to all staff working in the ongoing business.

 

Prior to appointing administrators, it emerged the accounting irregularities that emerged in October last year were worse than first thought.

 

A probe into its accounts discovered “extensive” misstatements, including "very significant manipulation of the balance sheet and profit and loss accounts".

 

This involved thousands of false entries into the company’s ledgers, it said.

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