Cosalt shares tumble as probe uncovers £4m hole

The Grimsby company started probing its Aberdeen-based offshore division in early September, and suspended its head Calum Melville. Mr Melville and his brother Stuart, the division's operations director, have both resigned.

Cosalt said the internal review revealed "evidence of a company-owned stock and work in progress shortfall of up to 4m". It is probing deeper to further establish the extent of the losses.

The group said it identified "a series of doubtful transactions" with an unnamed supply company, accounting for much of the shortfall. "The transactions could give rise to claims against those involved with the supplies in question," added Cosalt.

The group insisted it has enough stock to meet its commitments and ensure its services are not interrupted.

"The company's banks have been kept closely informed and the shortfall is not expected to have any further impact on the company's net borrowings," it added.

Forensic accountants KPMG have been called in and Scottish law firm Dundas & Wilson is advising it on recovering any losses.

Cosalt said to avoid prejudicing any future legal action, it cannot comment further on potential claims, but added it will be taking "all steps to maximise recovery".

Shares in Cosalt initially sunk to 3p but recovered some of their losses to close the day down 6.3 per cent at 3.75p. They have fallen about 64 per cent over the past year.

The Melville brothers joined Cosalt when it bought GTC Group, their company supplying lifting equipment to the oil and gas industry, in 2007 for 30m. The division employs 240 people in Aberdeen and about 100 in Stavanger, Norway, and Lowestoft, Suffolk.