THE multi-millionaire co-founder of Carphone Warehouse has defended his controversial attempt to take Cosalt private for just £404,000.
David Ross, chairman of the Grimsby-based offshore services company, plans to offer about 0.1p per share and de-list it from the stock market.
He told the Yorkshire Post his priority is ensuring Cosalt’s survival, and without him it may run out of cash.
“It’s a price – it’s not a happy price but the harsh reality of the situation is the current equity has been effectively wiped out.
“No doubt the oil services side has a future but in order to take advantage of it, it needs access to capital. That’s what I’m able to provide and I’m able to safeguard the jobs, which is key.”
Mr Ross’s father John and grandfather John Carl Ross were directors of the company before him. Mr Ross, a major donor to the Conservative party, has 15 per cent of Cosalt’s shares, and must make a firm offer by December 15. He and other shareholders have been supporting the group with loans, to supplement bank debt.
Mr Ross joined Cosalt’s board on in 2005 and was appointed chairman in June 2008. He stepped down as chairman in December 2008 because of a share scandal, but was reappointed in October 2009.
“I don’t want it to go bust,” he said. “My family has been involved for 50 years. It’s part of the Grimsby and Humber community.”
Cosalt’s board is considering his approach. The company, which makes workwear and provides services to the offshore oil and gas markets, warned this week it may run out of funds before the end of the year.
Cosalt recently sold its marine safety business, offloading 60 per cent of turnover to pay off debt and avoid administration.
However, it still has net debt of £12.3m – bank debt of £8.8m and shareholder and other loans of £3.5m.
The group said while it is in talks with its lenders, which include Royal Bank of Scotland and HSBC, it may use up its current facilities of £14.9m before the end of the year. The squeeze on working capital has also hampered its ability to capitalise on improving markets in offshore and workwear.
Mr Ross said the cost of its listing on the stock market is prohibitive.
“The public markets are not a good place for a business turning over £50m and making £2m,” he said.
Cosalt is still locked in a costly legal battle with former management of its offshore division over alleged fraud.
Mr Ross is thought to have been in talks with other shareholders about his buyout plans.
Cosalt was founded in 1873 as The Great Grimsby Coal, Salt and Tanning Company. It floated on the London Stock Exchange in 1971.