Shareholders in Patisserie Valerie have expressed frustration at a lack of information from the cake and cafe business, which is struggling for survival as it tries to secure support from its banks.
The company, which operates 200 cafes and employs nearly 3,000 staff, has been seeking to extend a standstill agreement on its bank facilities. The agreement protects the business from action to recover debts and it officially expired at midnight on Friday.
Patisserie Valerie plunged into crisis in October after it admitted it had uncovered a £40m black hole in its finances. Last week it said the situation was worse than expected as it had found “significant manipulation” and its profits would be “materially below” the £12m it had predicted when the problems first emerged. Prior to the crisis it had been expected to make a £30m profit.
On Monday morning the company issued a statement saying that talks with its banks were continuing and it would provide an update when they were concluded. The company’s shares have been suspended since October.
Paul Mumford at Cavendish Asset Management, which pumped an additional £100,000 into Patisserie Valerie as part of a £15m rescue-fundraising deal in November, said he had significantly written down the value of the company’s investment after last week’s statement.
He said it would not be a “massive surprise” if the cake company had to call in administrators. “The talks going on are quite critical. It is very disturbing they are going on after the standstill has run out.
“Everything is a mystery at the moment. One important thing missing is a Christmas trading statement … Everybody would get reassurance if we found the company had been trading profitably but we have heard nothing,” he said.
Chris Boxall at Fundamental Asset Management, another shareholder, said he was disappointed that the company had not provided clear guidance on its debt situation or an update on trading: “This is pretty extraordinary and pretty awful.
“We are still no closer to understanding the position of the banks and why the banks are still involved given the injection of funding [by shareholders].”
Without an agreement, the company’s lenders, HSBC and Barclays, could demand repayment of debts that may amount to nearly £10m, potentially forcing Patisserie Valerie to call in administrators.
The chain has hired the advisory firm KPMG to consider “all options”, which could include a second bailout by Luke Johnson, the multimillionaire chairman of the business, a sale or administration. Johnson pumped £20m of his money into Patisserie Valerie to keep it afloat but was repaid £10m of that sum after other shareholders later put up the £15m of new funds.
It has emerged that Johnson’s remaining loan is likely to be repaid ahead of other creditors if Patisserie Valerie does go into administration.