Rebel shareholders win battle to prevent Cosalt de-listing

UPDATE: David Ross this morning lost the vote to take Cosalt private following a shareholder revolt. At the general meeting of shareholders, hundreds of small stockholders with more than 100 million shares between them voted against Cosalt being removed from the stock market by Mr Ross, forcing the company to declare it would be kept public. Full report in Tuesday’s Yorkshire Post.

Shareholders gathered at the company’s base in Grimsby to vote on Mr Ross’s plan to de-list the embattled group.

Cosalt chairman Mr Ross, who owns 56 per cent of its shares, needed the backing of at least 75 per cent of voting shares to de-list the maker of workwear and provider of services to the offshore oil and gas industry.

However, private shareholders, who have been campaigning against the de-listing, claim more than 25 per cent of shares have been pledged against it.

Mr Ross refused to be drawn on what he plans to do if the vote fails, or to predict the outcome.

“If the vote does not go as the directors are proposing we would have to review and consider from there,” he said. “I’m not sure we can plan on the basis of ‘what if’.

“It’s very difficult to pre-judge that and that would be the wrong thing to do. I think it will be for the benefit of the company if we do de-list it. I would hope that the shareholders can see the logic behind that.”

He claimed the cost of Cosalt’s stock market listing was disproportionate, and it could no longer use the public markets to raise funds.

“Because of the history of this particular business, pension liabilities and the alleged fraud, this business no longer has the need for capital from public markets. Therefore we have got all of the regulated expense with none of the benefits.

“The costs are in excess of £500,000 a year. Our view is that this is disproportionate relative to the size of the business.”

Mr Ross, whose father and grandfather were directors of Cosalt before him, declined to say if he planned to invest more money in the business should it remain a public company. The company’s main lenders, Royal Bank of Scotland and HSBC, refused it more cash.

He has provided the company with a £5m working capital facility, £7.6m of loans and £4.6m of bank guarantees.

“Clearly it’s not my ambition that the company does not continue to survive. It’s dependent on its management and its staff for its future success. It’s not dependent on me for its future success. It needed to be rescued financially.

“My objective is to try to keep the business solvent and keep it afloat.”

Mr Ross’s attempts to buy the company – offering first 0.1p per share then 0.2p per share – failed to acquire sufficient shares to make today’s vote a formality. Shares in the company have traded above his offer price for some time, closing at 0.9p on Friday.

Private shareholders, angry at seeing their stakes in the company eroded and frustrated at Mr Ross’s £800,000 buyout attempt, set up website www.savecosalt.com to garner opposition to the vote.

One investor, who declined to be named, said: “The whole saga has gone beyond the aspirations of the shareholders to look after their savings. Minority shareholders should have a bigger say in the companies that they have invested in.

“David Ross has presided as chairman throughout the demise of the company.”

He claimed at least 26 per cent of Cosalt’s shares have been pledged against the de-listing motion.

Cosalt was brought to its knees by a heavy debt burden, the recession and an alleged fraud in its offshore division.

Mr Ross said he has no immediate plans to buy more shares, adding investors will be able to trade shares via a matched bargain facility if Cosalt is de-listed.

“I’m not going to be in a position where I’m buying any more shares unless it is part of a new offer. There’s no appetite to buy any more shares at the current time in the company.

“If they want to hold their shares for two to three years and work out whether there’s any upside, they can.

“We are a long way from being in a position pay a dividend.”

If successful, Mr Ross plans to grow Cosalt’s three divisions – offshore, workwear and renewables. However, he intends “efficiencies” at its head office, where 11 of its 360 staff work.

The company’s chief executive, Trevor Sands, said in a statement that Cosalt was now “in a sound financial position” with a “clear idea of the way forward”.

Mr Sands said while he believed the de-listing was Cosalt’s best interests, “if shareholders do vote in favour of remaining public it won’t change our plans for the business but it will make it more challenging to achieve them”.

Key moments in group’s history

1873: Great Grimsby Coal, Salt and Tanning Company is founded

1971: Floats on the London Stock Exchange and abbreviates name to Cosalt

1972: Receives Queen’s Award

October 2007: Buys GTC marine services group for £30m

June 2008: David Ross becomes chairman

June 2008: Buys Norwegian oil and gas support services firm Myhre-Maritime for £12m

August 2009: £18.9m fundraising to avoid covenant breach

August 2009: Admits having a number of takeover approaches

October 2010: Reveals £4m hole in offshore accounts

August 2011: Sells marine business to Survitec for £27m after costs and says more stable

October 2011: Profits and cashflow warning

November 2011: Mr Ross makes £400,000 offer

December 2011: Mr Ross makes £800,000 offer