Cosalt set to sell marine safety division

Survitec is expected to pay between £25m to £35m for the marine safety business, which services survival equipment such as lifeboats and survival suits.

Shares in Grimsby-based Cosalt were suspended at 4.12p yesterday morning after the group said it was in the “late stages” of agreeing the sale of the group’s marine business, which accounts for around half of group sales, the rest being the offshore business.

The group said funding arrangements are conditional on the sale.

Cosalt said that while it has made significant progress in its discussions, it can’t publish its accounts for the 14 months to December 31 until the deal is announced.

Under stock exchange rules the group had until April 30 to announce its results. As it is unable to do this at the moment, its shares have to be suspended.

Cosalt will announce its annual results at the same time it announces the sale of the marine business.

Earlier this year Cosalt revealed it may be forced to take impairment and exceptional charges totalling more than £17m following problems in its offshore division.

The group uncovered problems in its offshore division’s accounts in October, stemming from “a series of doubtful transactions”.

Cosalt said legal and exceptional charges from investigating and writing this off may reach £7m. It is also considering a non-cash impairment charge against the offshore division’s goodwill and intangible assets, worth more than £10m.

The group said that together with tough markets, this meant trading for the year to the end of October was below expectations.

“The reasons for this action largely relate back to the poor trading and losses which the business operations suffered under the previous offshore management team,” said the group.

Cosalt started probing its Aberdeen-based offshore division in early September, and suspended its then head Calum Melville. Mr Melville and his brother Stuart, the division’s operations director, then resigned. The group is currently pursuing legal action against the Melville brothers for alleged fraud.

Cosalt has streamlined its business to focus on marine and offshore, selling its holiday homes and childrenswear businesses.