Cosalt looks to future with funding

SAFETY equipment group Cosalt today said it is to raise cash through a share placing to avoid it breaching its banking covenants as it fell to a £3.4m half year loss.

The Grimsby-based group, which provides safety equipment such as liferafts and lifejackets for the marine and offshore oil and gas industries, blamed the loss on exceptional costs and writedowns as well as lower oil prices and the downturn for orders being deferred during the first half of its year plus a bill of £1m in fees after it extended its banking facilities.

Chairman David Hobdey said that given the drop in trading, the group has “implemented a cost reduction programme” which will deliver £1m of savings this year and £3m a year from next year.

He said Cosalt would not be paying an interim dividend. Group turnover for the 27 weeks to May 3 was £52.9m, up 7%.

Mr Hobdey said: “Whilst it has been a challenging first six months, due primarily to the impact of lower oil prices on demand for our offshore services and a generally more difficult economic climate for freight and port activity, we are now seeing an increase in order levels at Cosalt Offshore going into the second half of the year, the traditionally stronger trading period for this business and we have been encouraged by the resilience of our Cosalt Marine business.

“The board is confident of the long term prospects for Cosalt and believes that the group should now seek to strengthen its balance sheet with an equity fundraising to ensure that the group will be well placed to take advantage of both specific opportunities in its offshore and marine markets and a general upturn in economic activity.”

Following the appointment of chief executive Mark Lejman in June 2008, the firm has sold off its holiday homes business, focused on strengthening its management team and reorganising its financing.

Mr Hobdey said the focus following the fundraising would be on a fourth objective – further acquisitions in its core markets of marine and offshore.