Chairman makes Cosalt takeover approach
OFFSHORE safety equipment provider Cosalt has revealed its chairman has made an approach to buy the business and take it private.
David Ross has said he would be prepared to pay 0.1p for each share in the Grimsby-headquartered business, which recently sold its marine division.
Cosalt, which today said it may have to access further bank finance to provide working capital, said the approach by Mr Ross may or may not lead to a full offer for the company.
“In the context of the continuing difficulties facing the company and the challenging funding environment, Mr Ross believes that the company may be more readily recapitalised and moved forward as a private business and has indicated that he would be prepared to pay 0.1 pence for each ordinary share in issue,” Cosalt said this morning.
Cosalt’s shares were trading down more than 50% in early trading at 0.38p today.
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The company, which provides workwear and safety equipment to the offshore industry, was forced to warn last month that trading this year would be “significantly lower” than previously expected.
Cosalt said this morning that between July 1 to yesterday, the £27m of proceeds from the sale of its marine division had been used to reduce the group’s debt.
Trading remains challenging, the group said, as a review into its operations and future funding requirements continues.
Cosalt said in a statement: “Pressure has continued, since the October announcement, on the group’s cashflows and financial position.
“The group currently has net indebtedness of £12.3m (bank borrowings of £8.8m and shareholder and other loans of £3.5m) and management is maintaining an ongoing dialogue with the company’s lenders.”
Cosalt said it may have to access its available facilities, of £14.9m, in full before the end of its current financial year.
“During the period, external trading conditions in the group’s offshore and workwear markets continue to improve, however, the group has been unable to fully capitalise on this, primarily due to the pressure on working capital,” it added.
Mr Ross, who has agreed to personally guarantee £300,000 of security for costs in relation to an ongoing Cosalt litigation case, is fully supportive of the company, Cosalt said, and is himself providing debt funding.
“Mr Ross has also indicated that should an offer be put forward and he acquire control of Cosalt, it is his intention to provide additional capital investment to expand the group’s existing businesses for the benefit of the group’s customers and other stakeholders.”
A committee of independent directors of the board, comprising Maurice White, Kenneth Murray and Yarom Ophir, has been established to discuss the possible offer.
