Danny McCance 15 Oct 2018 11:43am

Patisserie Valerie board finds “secret” overdrafts

Two overdraft facilities have been found at Patisserie Valerie, through which £9.7m has already been spent

The board of the embattled café chain revealed that the two “secret” company overdrafts had been set up with Barclays and HSBC, according to the Sunday Times.

Entrepreneur and Patisserie Valerie Holding chairman Luke Johnson told the Sunday Times that this past week had been “the most harrowing week of my life”.

Johnson provided £20m in loans on Friday to save Patisserie Valerie from collapsing following the accounting scandal that led to the arrest of the chain’s finance director Chris Marsh last week.

On Thursday Marsh was arrested and later bailed, as well as being suspended from his role after “significant, and potentially fraudulent, accounting irregularities” were found.

An estimated £20m accounting hole was revealed, which a forensic accounting team from Big Four firm PwC is working with Patisserie Valerie to investigate.

On Friday Johnson arranged the rescue fundraising, providing a £10m loan.

He also set up a £10m “bridging facility”, to be repaid from £15.7m that has been raised from a “conditional placing” of shares with institutional investors.

The sale of shares at 50p led to the chain’s valuation plummeting from £446m to £68m.

“I believe in the business as an economic entity, so I don’t think it was a wholly emotional decision, but I think there was a moral obligation,” Johnson told the Sunday Times.

He said that with 2,800 jobs at stake and in light of the 12 years spent making the business a success, both he and the board felt they could not let it go into administration.

Following the revelations last week, it is believed that the Financial Reporting Council will open an investigation into the matter, although the authority has not confirmed this is the case.