Blackfriar: Bargain basement offer a last-ditch attempt to save Cosalt

The tycoon, who co-founded Carphone Warehouse, wants to pay just 0.1p per share to buy the Grimsby-based company outright.

It’s an audacious price to set on a firm turning over about £50m, with considerable assets.

Ross said last week the company’s equity has been “effectively wiped out”.

If that was not the case before his approach, it certainly is now. Revelation of his planned offer wiped 40 per cent from Cosalt’s market value

Cosalt shares now change hands for just 0.25p each, valuing the company at about £1m.

“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,” said Ross, a 15 per cent shareholder, who has helped keep the company going with personal loans.

Ross has defended his approach as a last-ditch attempt to save an ailing company and its workers – he believes without him, it will go bust.

“My primary preoccupation is to safeguard jobs in communities that matter to me,” said Ross yesterday.

“In the current economic environment I believe the absolute priority here is to safeguard and indeed build job opportunities in some economically challenged areas.”

If he succeeds, Cosalt will certainly not be the first of the region’s listed companies to be taken out with a bargain basement offer. Ross’s takeover approach has echoes of Peter Gyllenhammar’s buyout of Bradford-based fibres group Chapelthorpe.

That deal, sealed at the start of the year, saw the Swedish value investor first seize control, then buy the company outright for just £5.1m.

Shareholders had the tough choice of either remaining minority investors in a company about to be delisted, or take the paltry 25p a share offer.

The Cosalt scenario is slightly different – it’s in a make or break situation, with working capital fast running out.

Yesterday, in a couple of confusing statements, the company suggested it has until the end of the month to get fresh capital or faces administra- tion.

But the end result will be the same – shareholders will be left nursing huge losses.

Looking back, Cosalt entered the recession with too much debt and was forced into an £18.9m heavily discounted fundraising in 2009.

The sale of its marine safety division earlier this year to Survitec for £31m was a second crucial chance to set the company on an even financial keel. But Cosalt failed to secure adequate funds so less than three months later it’s running out of cash.

Blackfriar does not doubt Ross’s commitment to Grimsby and the Humber region.

He’s pumped millions of his own money into charitable causes in the area, and supports the Havelock and Humberston Academies in North East Lincolnshire.

Ross’s family also has links stretching back 50 years with the company, which was run by both his father and grandfather before him.

Yesterday he was confirmed as vice chair of the Humber Local Enterprise Partnership. He and former Northern Foods chairman Lord Haskins will form a formidable force to champion the region’s businesses. In the absence of another offer or an improbable act of generosity from its banks, Blackfriar suspects he’ll get his way.

n Blackfriar heard some valuable perspectives on how companies can make themselves relevant to the public at a conference featuring some of the nation’s corporate heavyweights.

While much of the Confederation of British Industry annual conference was devoted to growth and re-balancing Britain’s finances, some of the speakers attempted to add another dimension.

Charlie Mayfield, chairman of employee-owned partnership John Lewis, said corporate Britain needs to “re-establish the extremely valuable social purpose of business”.

“The key responsibility of a business is to offer people employment,” said Mayfield. “They give people an opportunity to feel valued.”

Former HSBC chairman and now Government trade minister Lord Green added British firms can learn lessons from their Chinese counterparts.

“The thing the Chinese and Singaporeans have got right is a long-term focus – taking a generational view of where you need to be and where you position your business,” said Green.

Blackfriar wonders if those two suggestions alone might go some way to bridging the growing gulf between big business and the public.