Cosalt gets £1m loan extension

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EMBATTLED offshore services group Cosalt has secured a one-month loan extension from major shareholder and chairman David Ross.

The Grimsby-based group said the repayment of a short-term £1m credit facility provided by Mr Ross has been extended until June 30.

The company is continuing to hold talks with Mr Ross, its pension trustees and its banks to try to secure a longer term financing solution. The group said that until it successfully concludes these discussions, it won’t be in a position to publish its report and accounts for the year to December 31.

It said it is focusing on finding a solution to its longer term finance needs and will make a further announcement as soon as possible.

Last month Cosalt said margins and cashflow have been squeezed since the start of the year as it struggles to sort out its finances. The company’s shares remain suspended.

Cosalt is currently reliant on Mr Ross for funding, but said this is unsustainable.

The company said that although group sales so far this year were in line with the board’s budget there has been pressure on margin and cashflow.

It added that its cost base and debt levels are significantly constraining the business and are not sustainable over the longer term in the absence of a new financing solution.

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.