Cosalt urges investors to accept chairman’s offer

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STRUGGLING offshore services group Cosalt has written again to shareholders to warn them an £800,000 offer from its chairman is the company’s only realistic chance of survival.

Carphone Warehouse co-founder David Ross wants to buy and de-list the Grimsby-based group, which serves the offshore oil and gas sectors and makes workwear.

He recently doubled his offer from £400,000, and now owns or has agreed to buy 49.3 per cent of its shares, meaning he is just a fraction away from seizing control of the company.

His new offer, through his Oval acquisition vehicle, is for 0.2p per share.

Mr Ross, whose father and grandfather were directors of Cosalt before him, says his primary motivation is preserving jobs at the company, which employs about 360 staff.

Maurice White, Cosalt’s senior independent non-executive director, told shareholders “the company continues to be in a difficult financial position”.

“As such, the recommended increased offer represents the most realistic means of securing the company’s future,” he wrote.

Mr Ross recently bought a 10.1 per cent stake from Brookwell Ltd, a Guernsey investment fund, which held about 41m shares in the company.

He also bought an 18.3 per cent stake from Sovereign Holding, a Bermuda-based holding company representing the Rappaport family.

“Since the publication of the original offer document, there have been no other alternative funding offers forthcoming and certain of the company’s key shareholders have sold their entire holdings of Cosalt shares to Oval,” wrote Mr White.

“In light of these developments, it remains unclear how the Cosalt Group would be able to fund its operations without David Ross’ continuing support or if Oval’s recommended increased offer does not proceed.”

Mr Ross recently lent the company £5m of short-term cash to keep it trading. The loan is repayable on January 10, a day after his new offer closes. Cosalt’s lenders Royal Bank of Scotland and HSBC have refused it more cash. The company also revealed its net debt has risen to £15.9m.

Cosalt plans to convene a general meeting to approve the de-listing, should Mr Ross’s offer be declared unconditional.

Cosalt recently sold its marine business to private equity for £27m after costs to cut debt. It also raised £18.9m from shareholders in August 2009 through a deeply discounted rescue fundraising. The company is also locked in a costly legal battle with former directors.

Mr Ross was recently appointed vice-chairman of the Humber Local Enterprise Partnership, a body which aims to promote business in the Humber region. He also supports the Havelock and Humberston Academies in North East Lincolnshire.