A couple of real tough cookies They found the recipe for survival

afterwards I saw many familiar faces, including Tom Lambie, managing

director of Highlander Snacks, the Bathgate-based, Italian-owned crisp

manufacturer, and Debbie Peterson, the ebullient founder of Govan's own

California Cake & Cookie Company.

Little did I realise at the time that the pair had been involved, for

months, in tense negotiations about the future of Debbie Peterson's high

profile venture, slogan: Homestead history in the baking.

Nor was it obvious from their expressions that that weekend was

proving pivotal in the whole unfolding drama, with Peterson seizing on a

chance suggestion from her concert companion to initiate a bit of

do-it-yourself fund-raising to help save her company.

The end result was announced in late January. 3i injected #325,000

into CC&C through its fast-track, low-cost core capital scheme. Other

investors took the new capital injection to #500,000. Tom Lambie left

Highlander to become California's executive chairman, and managing

director Peterson -- now sitting face-to-face with Lambie at two desks

shoe-horned into the company's modest offices -- is devoting her

considerable energies to redoubling CC&C's sales and marketing push.

The deal had actually been completed a week before Christmas. In

keeping with the intensity of the main drama, the climax had not been

without its moments. The day 3i said yes to the package, CC&C's bankers

actually pulled the plug. For five hours Debbie Peterson's creation was

in financial limbo, until the banking relationship was reinstated. Both

she and Lambie stress that, despite the bank's occasional nervousness,

it has, for the most part, been highly supportive.

But both she and Lambie also insist that, throughout the saga, the

baker's commitment to its customers did not falter once. In spite of all

the dark clouds swirling around CC&C's very future, the brownies and

portions of carrot cake and mud pie continued to flow.

''We could write a book about it'' says Lambie ''and it would make

better reading than Harvey-Jones. But in situations like that you've got

to stick at it.'' California's new chairman should know. He's shouldered

more than his share of disappointments and tense corporate negotiations.

In 1987, he lost out to whisky distiller Robertson & Baxter in a bid

to stage a management buy-out of Paterson-Bronte, the oatcake and

shortbread maker then owned by Argyll. And, having moved on to lead a

start-up, Forth Valley Foods, with some of the redundant workforce from

the Golden Wonder crisp factory in Broxburn, he saw that brave venture

end up in receivership in February 1991.

Lambie had continued to run the renamed Highlander Snacks when the

Italian group Unichips Finanziaria bought Forth Valley from the

receiver. Of his interest in moving to California he says only: ''I had

decided I wanted to try pastures new.''

The move to Govan is, in fact, a move back to pastures old for Lambie.

As a technical chemist, fresh from university, his first job was with

Lyon's Bakery in premises bought from the Galbraith grocery chain. These

premises are now the Elderpark Workspace, where CC&C is a tenant. ''This

is where Lyons had its slab cake manufacturing'' says Lambie, waving a

hand at the office he shares with Debbie Peterson.

The chain of events which brought the pair together goes back quite a

long way. Debbie Peterson -- yes, she is an American and yes, she does

hail from California -- founded CC&C in 1983. The years since have been

marked not just by the introduction of transatlantic bakery favourites

to Scottish palates, but also by sustained publicity and a clutch of

business awards.

Latterly CC&C had a turnover of some #2m. But, in Tom Lambie's words,

it had the profile of a business turning over #10 to #15m. Debbie

Peterson recognises the dichotomy.

''We recognised early on that we had to get the brand well-known

before the competition moved in. In fact we got a longer honeymoon than

I expected. We continued to innovate. Not only were we first with

American bakery products, we were first with single packaged portions.

And we were first to brand caramel shortcake as millionaire's

shortbread.

''But our capital base remained pretty slim. We were warned we would

need additional resources if we ran into trouble. And we started to look

at these issues two years back. The team who had started the company

were all in their teens and early twenties. We had reached the stage

where we had to grow up, and bring in the kind of management trained in

corporate baking Britain.''

With that corporate rethink underway, California hit a major problem.

Its English distributor ran into financial difficulties. With CC&C owed

a total of #200,000, payments began to take longer and longer. Peterson

faced a dilemma. She wanted the money owed -- and took some tough

measures to recoup it -- but she couldn't afford to jeopardise

California's share of the key English market.

Towards the end of 1992, the crisis caused by the distributor was

exacerbated by the traditional low-demand period for CC&C's products.

Cash got very tight. ''We called in our major suppliers and explained

the situation'' Peterson recalls. ''They were very supportive and kept

us going.''

She also called a friend at the Glasgow Development Agency. The GDA

asked James Finlay Bank to assess California's position. Finlay's

assessment was that, if Peterson could trade through California's

immediate problems, a refinancing exercise could be successfully

mounted.

Peterson called in some family money and, with help from the Govan

Initiative, bought a #40,000 breathing space. A rescue had been in

prospect for her English distributor but, by January 1993, that had

collapsed and the business ended up in receivership.

Drawing on her inner strengths -- ''I wasn't ready to lay down and

die. I had a lot of confidence in our products and our company. I would

have been letting down our suppliers, our customers and the 80 people

who work here. I wasn't prepared to do that.'' -- Peterson managed to

strike a deal with the people who purchased her English suppliers assets

from the receiver.

In essence, thanks in part to some sterling work by Eric Galbraith at

Dorman Jeffrey, the new owners bought a distribution agreement from

CC&C, which meant California would recoup most of what it was owed over

a three year period. ''It was a win, win, win situation'' says Peterson

now.

With the immediate crisis resolved, Peterson put her business plans to

the GDA and 3i, who introduced her to Tom Lambie but put off any

decision on investment for six months. GDA seemed willing to invest.

She was introduced to a number of people who might fill that ambition

to attract ''corporate baking Britain'' talent into California. ''I felt

most comfortable with Tom Lambie,'' she says now. ''Tom saw an

opportunity to turn our manufacturing operation up a gear. I would be

able to use my skills to go out and sell the product. It was such a good

combination.''

Not everyone saw it that way. In July the GDA made a formal offer to

inject #75,000 into CC&C. But that offer then seemed to drift into

bureaucratic suspension. Part of the problem was that the local

enterprise company had wanted Peterson to team up, not with Lambie, but

with another potential investor willing to put #50,000 into CC&C.

Peterson went quite far down the road with this individual. But she

grew increasingly suspicious about his motives. She became increasingly

convined that he wanted control of California on the cheap. She says he

began to phone suppliers, trying to undermine her credibility.

In the end he backed away, by which time GDA had reversed its previous

offer to invest in California. At one stage, Peterson says, she was told

there were bigger rescue priorities on the other side of the river,

where the GDA was heavily involved in creating a phoenix operation at

Albion'saxle plant.

Tom Lambie backed off when GDA said no. But stayed in touch. That

painful summer had culminated in the bank calling in CC&C's overdraft

facilities, then agreeing to a six week extension when Debbie Peterson

agreed to dispense with her existing board.

By November, and the night of that 3i concert, Peterson was beginning

to despair. On the way to Kelvingrove, her companion said: ''Why not try

and get 50 individuals, say, to invest #500 each?'' By the end of the

evening Peterson, with typical attack, had garnered pledges totalling

#2000, including one from Tom Lambie.

Next morning she phoned James Finlay Bank. ''If you can come up with

#20,000 over the weekend we may have a proposition'' she was told. She

actually managed #13,000 in pledges by the following Monday. But it was

enough to reopen talks with 3i's Roy McKelvie.

What followed happened very quickly. 3i came in with its core capital.

To its credit the GDA went back to its original position and subscribed

#75,000. The Govan Initiative and Strathclyde Business Development also

contributed to the package. The bank, despite those moments of

nervousness, has helped with new sales leads since the package was

confirmed.

''We have'' says Lambie ''done three things with the new money. First

we have sufficient working capital to ensure we are not looking over our

shoulders every five minutes. We have invested selectively in new

equipment to improve our manufacturing efficiency. And we are developing

our marketing and sales side.''

From next month, those cookies and portions of mud and maple pie and

all the rest of the range will appear with new labels in striking new

point-of-sale boxes. There are new slogans: For the California range

''Life is uncertain, eat dessert first'' and for the Millionaire's

Shortbread range ''It's seriously rich''.

The new marketing treatment should build on CC&C's expanding customer

base, with steady inroads being made into airline catering, cross

channel ferries and inter-city trains. ''We are in the snack business

and it's total definition'' says Lambie. ''We are selling to customers

who are seeking quality but also insist on value for money.''

Little more than a year ago, Debbie Peterson wrote in The Herald

''Failure is not a fault, it is the downside of the risk of trying.''

Happily she has tried and happily, despite the scares and alarms of the

past year and a half, she has not yet failed. With Tom Lambie on board,

they could turn into a very formidable duo.