Cosalt bids to issue shares to secure long-term future

Shares in the Grimsby-based group were yesterday suspended after it missed a reporting deadline.

Cosalt said it was unable to publish its 2011 results by the end of April because of uncertainty around its financing.

Cosalt added it is in talks with its pension trustees and banks to find a “long-term financing solution”.

The company is currently reliant on major shareholder David Ross for its funding.

The Carphone Warehouse co-founder has so far lent the company £8m plus £4.6m of bank guarantees.

He previously made an unsuccessful attempt to buy and de-list the company for £400,000, which he later upped to £800,000.

Cosalt said its multi-millionaire chairman has agreed to extend a £1m credit facility by a month to May 31.

“The company is continuing discussions with David Ross and the group’s pension trustees and its banks to secure a long-term financing solution to ensure it has sufficient working capital to sustain the business,” said the group.

“Any such solution is expected to involve the issue of new equity share capital. Whilst the board has continued to progress these discussions, their outcome remains uncertain.”

Cosalt declined to elaborate on the equity-issue plans, but it is thought the proposals will need investor approval.

Should shareholders be unwilling or unable to participate in an equity fundraising, it is likely they would be diluted.

Cosalt’s shares were suspended at 0.82p, valuing the company at little more than £3m.

Mr Ross’s attempt to de-list Cosalt was scuppered in February when private shareholders narrowly defeated him in a vote.

Mr Ross, who holds 56 per cent of the company’s shares, argued its £500,000 annual listing costs were disproportionate to the benefits, adding the company would be better off private.

However, just over 73 per cent of the votes cast were in favour of the proposal to de-list Cosalt, meaning the de-listing plans failed to achieve the required backing of 75 per cent of voting shares.

“It’s important that the company finds a long-term financing solution,” said a Cosalt spokesman yesterday.

“This solution needs to have all parties involved – lenders, pension trustees and shareholders.

“It’s too early to say more.”

Cosalt was brought to its knees by a heavy debt burden and alleged fraud.

It has businesses in Barnsley, Stockport, Aberdeen and Stavanger, Norway.

It makes workwear and provides services such as heavy lifting to the offshore oil and gas sectors.