Patisserie Holdings has raised £15.7m through a share placing and secured a further £10m loan from chairman Luke Johnson.
At 5.15pm this evening (Friday, 12 September), the group said 31,451,100 ordinary shares had been placed with institutional investors at a price of 50p per share via an accelerated bookbuild, raising £15.7m.
Application will be made for the admission of the shares to trading on AIM. It is expected that admission of firm placing shares (10,000,000 ordinary shares) will become effective at 8am on October 18, with the conditional placing shares, (21,451,100 ordinary shares) becoming effective at 8am on the morning following the General Meeting (expected to on or around 1 November 2018).
Johnson has also provided the company with a bridging loan facility of up to £10m, which is to be repaid upon receipt of the placing proceeds following firm admission and conditional admission
The net proceeds will primarily be used to fund the group’s immediate outstanding liabilities, including amounts owed to HM Revenue & Customs, trade creditors, general working capital purposes and committed capital expenditure. The company said it expects its principal lenders to enter into standstill agreements and to agree not to take action to enforce the recovery of their outstanding debt for 12 months. The standstill period will end, however, if the placing does not complete, or certain insolvency procedures are commenced.
Based on the current information available to them, the directors said they believe that upon completion of this equity and debt fundraising, the group will be able to continue trading in its current form for the foreseeable future.
The board issued a statement this afternoon saying that the initial results of an investigation had shown the group required an immediate cash injection of £20m to continue trading in its current form and avoid the need to appoint administrators.
The directors also confirmed that the group has net debt of approximately £9.8m.
Historical statements on the cash position of the company were mis-stated and subject to fraudulent activity and accounting, the board confirmed. The directors estimate that based on current run rate information available, annual revenue and EBITDA, before exceptional one-off costs, for the year ending 30 September 2019 could be approximately £120m and £12m respectively. At its most recent trading update, for the half year to 31 March, the group reported revenue of £60.5m with EBITDA at £13.6m while pre-tax profits were stated as £11.1m.
The board reiterated that the investigations remain at a very preliminary stage, and will be subject to further, comprehensive review in the weeks and months to come.
The group first announced on Wednesday that it had uncovered “significant, and potentially fraudulent, accounting irregularities”, and suspended trading in its shares. It launched an investigation into its position and suspended chief financial officer Chris Marsh from his role.
A few hours later it revealed a winding up petition relating to a £1.1m unpaid tax bill.
This morning the company said it had been made aware that Marsh had been arrested on suspicion of fraud by false representation.