Investors block bid to take Cosalt private

Cosalt chairman Mr Ross owns 56 per cent of the firm’s shares, and needed at least 75 per cent of voting shares to de-list the company. However, with just over 73 per cent of the votes cast in favour of the proposal to de-list Cosalt, it was announced at a meeting at the company’s base in Grimsby yesterday that it would remain public. Mr Ross told shareholders at the EGM that the costs associated with being publicly listed were more than £500,000 per year.

Cosalt, which serves the offshore oil and gas sectors and makes workwear, employs about 360 staff.

Mr Ross recently doubled his buyout offer to £800,000. His offer for 0.2p per share was through his Oval acquisition vehicle.

Trevor Sands, the company’s chief executive, revealed at the meeting that the company requires further funding to meet working capital requirements coming up as the business “moves into a busy period”. Cosalt said it is in discussions with potential providers. The company’s main lenders, Royal Bank of Scotland and HSBC, refused it more cash. Mr Ross has provided the company with a £5m working capital facility, £7.6m of loans and £4.6m of bank guarantees.

Mr Ross said: “The benefits of public listing are access to capital and we don’t have access to capital. The only people benefiting from this are the advisers and our competitors.”

Mr Ross, whose father and grandfather were directors before him, said: “This is a company that my family has been involved in for three generations. The business and its employees matter to me. I do hope and do believe there is a future for this business.”

One shareholder asked how long it would take to turn around the business if it were to become private. Mr Ross said issues relating to an alleged fraud in Cosalt’s offshore division and the firm’s pension deficit, said to be around £9m, need to be resolved.

He said: “I think that in order to start turning the business around it will take another year or so and I think that year is best spent turning the business around in a private environment.” The company’s net debt position on February 9 was approximately £18.7m.

Another shareholder said that when he had first invested in Cosalt its share price was £4. Yesterday, it closed at 1.30p. He told Mr Ross: “Under your stewardship my investment has been completely wiped out.” He said Mr Ross had a “moral and legal duty” to drop his attempt to “take the company away from private shareholders”. The shareholder also suggested that the £500,000 costs relating to being publicly listed were “over-egging the pudding somewhat”.

Mr Ross responded: “I’m not asking to buy your shares. I’m asking you to stay on as shareholders in a private company.” If the company had gone private, traders would have been able to trade shares in a matched bargain facility.

Private shareholders set up a website www.savecosalt.com to garner opposition to the vote. A spokesman for the SORT campaign, whose members’ collective holdings are more than 25 per cent, said: “We are delighted that the company is going to remain listed.”

But he said shareholders had already “said no” three times previously, adding that the EGM was “a total waste of everyone’s time and money”.

The spokesman said: “Over 300 small shareholders have invested in excess of £15m in the company, with a combined holding of approximately 35 per cent. Accepting Mr Ross’s offers to buy their shares, or agree to his de-listing plans, would render their shares worthless.”

He said the idea of trading shares using a matched bargain facility “is nothing more than a death trap to SORT shareholders”.

In a statement, Mr Ross said: “Given the current position of the business, the board and I believe that the company would be better off as a private enterprise without the associated high costs of being a listed company. However, the decision from today’s general meeting means the company will continue to be listed and as a board we will plan accordingly.”

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