Patisserie Valerie chairman Luke Johnson faces investor fury

Shareholders in the owner of struggling cafe chain Patisserie Valerie have vented their anger at the firm’s chairman, despite backing his rescue plan for the business.

At an emergency general meeting, more than 99% of shareholders backed a plan to issue £15m of new shares.

However, investors in the 206-store chain harangued chairman Luke Johnson.

They felt cheated that new investors are getting a share of the company at a knock-down price.

Shareholders also accused Mr Johnson of “holding a gun” to their heads over the rescue deal.

One shareholder, Heather Goddard, told the BBC: “I felt closed off in the meeting and I didn’t feel any questions were answered.

“I felt when he came in and started the meeting saying 99% of the votes in by proxy were in support of them, what he was basically saying to me was, ‘You don’t count.’

“When I asked him why there was there a gun to our head for this deadline… he didn’t provide me with an answer I understood.”

Analysis

Simon Jack, business editor

Ultimately, the shareholders had no choice. Approve a plan that will see new investors get shares at a massive discount to the existing owners – or see the company collapse, wiping out the value of their investment entirely.

Serial entrepreneur Luke Johnson, who built Pizza Express and Feng Sushi into successful businesses and owned 37% of Patisserie Valerie, put £20m of his own money into the company in early October, when the chain was hours away from folding.

That didn’t stop small shareholders from being angry and feeling short-changed. There were bad-tempered exchanges at the company’s emergency meeting.

The sale of £15m in new shares will be used to pay Mr Johnson back £10m of his emergency loan.

Many small investors told the BBC they backed the company because they trusted Mr Johnson.

He said he would be stepping down from a significant number of other company boards to focus on reviving that trust and the company.

With a forensic accounting probe and a Serious Fraud Office inquiry under way, that will be a full-time job.

Mr Johnson was forced to lend Patisserie Holdings – which owns the Patisserie Valerie chain – £20m of his own money to prevent its collapse after directors said it required an immediate cash injection.

He said on Thursday that the firm had been “three hours from going into bankruptcy”, adding that he would be reducing his other commitments to focus on rescuing Patisserie Valerie.

The chain is still fighting for survival after revealing last month it had uncovered “significant, and potentially fraudulent, accounting irregularities”. Trading in the company’s shares has been temporarily halted.

Finance director Chris Marsh is the subject of a criminal investigation.

Mr Marsh was suspended when the problems were discovered, and he resigned from his position on 26 October.

Patisserie Holdings

• It has five brands: Patisserie Valerie, Druckers – Vienna Patisserie, Philpotts, Baker & Spice and Flour Power City.
• Now there are 206 stores across the chain and more than 2,500 staff as of May 2018.
• It was floated on the AIM stock market, for smaller companies, in 2014.
• The first Patisserie Valerie café was opened on Frith Street in London’s Soho district in 1926.
• In 1987 the Scalzo family bought the Old Compton Street store and ran the business.
• In 2006, Luke Johnson’s Risk Capital Partners bought a majority stake when it had eight stores.