Cosalt warns it faces insolvency

COSALT today warned it is likely to go into administration by the end of February unless it can reach an agreement with its banks over its debts of £17m.

The Grimsby marine safety business said that it has secured no alternative sources of funding and discussions are ongoing over the sale of its two main operations, Cosalt Workwear and Cosalt Offshore.

However it needs the agreement of its lenders and pension trustees to achieve these sales and for it to continue trading while it seeks backing from its shareholders for the disposals.

In an update today, it said its banks, Royal Bank of Scotland and HSBC, had raised concerns that it would not have the cash available to continue to trade during a lengthy sale process and wanted it to provide alternative funding and chairman David Ross to extend his bank guarantees beyond the date it would expect to sell the businesses.

It said in a statement: “The company has had and continues to have extensive discussions with existing and potential funders but no alternative source of funding is currently available to the group.  In the event that the banks conditions cannot be met, in the absence of the banks agreeing an alternative course of action to enforcing their security, the directors consider that Cosalt plc (the parent company of the Cosalt Group) would be likely to enter insolvency proceedings on or before 28 February 2013.”