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  1. ITV Report

Patisserie Valerie saved by £20 million cash injection

  • Video report by ITV News Correspondent Joanna Partridge

Patisserie Valerie is set to be rescued by a £20 million cash injection.

Patisserie Holdings chairman Luke Johnson is offering the money in loans in an effort to keep the company afloat.

In the mean time the group will look to raise £15 million by issuing new shares.

Mr Johnson said it would be "business as normal", meaning that nearly 3,000 jobs have been saved and the company has avoided collapse.

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"We have rescued the business," he said in an interview following a torrid 72 hours for the company.

"I've never experienced anything like it in my life but we've come through it in this week - I've obviously made a huge personal commitment, I think we have a good business with loyal staff, and I think of it now as back on stable footing."

Mr Johnson, a serial entrepreneur, is the largest shareholder in Patisserie Holdings with a 37% stake.

Funds raised through the share placement will be used to pay back around half the money loaned by Mr Johnson, as well as to meet outstanding liabilities including the £1.14 million bill owed to HM Revenue & Customs.

In a statement issued to the market on Friday afternoon, Patisserie Holdings said the loans would enable it to continue trading for the "forseeable future".

Mr Johnson said: "I did it because I believe in Patisserie Valerie. I spent 12 years involved with this business, we've employed 2,800 staff and rescuing it has essentially saved those jobs and I believe it has a strong future."

Luke Johnson is the majority owner of the cake chain. Credit: PA

Directors also confirmed on Friday that the group has a net debt of approximately £9.8 million.

The company said earlier this week that it had found a major black hole in its accounts.

Patisserie’s finance director Chris Marsh has since been arrested on suspicion of fraud.

A stock market announcement by Patisserie Holdings said: "The loan is for a three-year term and made on an interest-free/fee-free basis and will be secured in due course".

The proceeds from the share placement will be used to pay amounts owed to the likes of HM Revenue & Customs and trade creditors.

It has also been earmarked for "general working capital purposes and committed capital expenditure," Patisserie Holdings said.

Two Patisserie Valerie branches in London were closed on Friday, as the chain’s parent company faced collapse.

Landlords forfeited the leases on locations in Hammersmith and Edgware Road, citing a breach of contract.