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Irish fund Causeway rescues UK's Patisserie Valerie

Written by Business World, on 15th Feb 2019. Posted in General

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Collapsed UK cafe operator Patisserie Holdings sold its two main businesses for 13 million pounds on Thursday, administrators said, in a deal that rescues dozens of cafes and some 2,000 jobs.

Patisserie said in a statement it had sold bakery chain Patisserie Valerie to Irish private equity fund Causeway Capital and its Philpotts brand to food retailer A.F. Blakemore for 10 million pounds cash and a further 3 million in future payments.

KPMG said 21 Philpotts stores had been sold.

It said it also had strong interest in another brand, Baker and Spice, and would give an update on it shortly.

The total price given for Philpotts and Patisserie Valerie was 2 million pounds less than the more than 15 million pound offer for the company withdrawn by Mike Ashley's Sports Direct earlier this week.

Causeway separately confirmed it had agreed terms with administrators KPMG for a deal that put Chief Executive Officer Steve Francis back in charge of the firm.

Patisserie plunged into crisis in October when its owner uncovered accounting irregularities. It hired KPMG as administrators in an attempt to save the company, which traces its roots back to a shop founded 93 years ago.

Patisserie will maintain 96 branches across Britain and Northern Ireland, Causeway said, adding 2,000 employees will transfer to a new corporate entity operating the Patisserie Valerie business with their "existing employment rights and benefits honoured".

"We are delighted to welcome Causeway Capital as our partners in Patisserie Valerie, ending a disruptive period of uncertainty for the business," Francis, a turnaround specialist who took the helm in November, said.

"This looks like good news for Patisserie Valerie and its staff, though the jury is still out on how many outlets might actually be saved, as negotiating with landlords may prove tricky," Laith Khalaf, Senior Analyst at brokerage Hargreaves Lansdown, said in an email.

"The high street is still a tough place to do business right now, and Patisserie Valerie will have to work extra hard because it's also reeling from the recent accounting scandal," he said.

Patisserie Holdings, whose cafes are best known for their range of cakes, ran around 200 outlets, employing about 2,500 people, and had a stock market value approaching 500 million pounds before it ran into trouble.

Causeway Capital Partners was advised on the deal by Burges Salmon Solicitors. (Reuters)

Source: www.businessworld.ie

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