Struggling Cosalt continues funding talks

EMBATTLED offshore services group Cosalt said margins and cashflow have been squeezed since the start of the year as it struggles to sort out its finances.

The Grimsby-based group yesterday said it remains focused on finding a new financing solution, while its shares remain suspended.

The company is currently reliant on major shareholder and chairman David Ross for funding, but said this is unsustainable.

“Although group sales were in line with the board’s budget, during the period there has been pressure on margin and cashflow,” said Cosalt.

“In addition, the group’s costbase and level of indebtedness continue to significantly constrain the business and are not sustainable over the longer term, in the absence of a new financing solution.

“The board is very focused on finding a solution for all parties involved in the discussions and will make a further announcement as soon as possible.”

Carphone Warehouse co-founder Mr Ross has lent the company £8m plus provided £4.6m of bank guarantees. He previously made an unsuccessful attempt to buy the company for £400,000, which he later to upped to £800,000. In total Cosalt has borrowings of £14.9m.

The group has warned its efforts to secure long-term financing are likely to mean the issue of new equity share capital. It has businesses in Barnsley, Stockport, Aberdeen and Stavanger in Norway.