Ross: Buy-out offer is crucial
David Ross has written to Cosalt shareholders, warning that the crisis-engulfed company he chairs – and has formally offered to buy out – will not be able to survive should his bid not succeed and no other funding materialise.
Grimsby's richest son has taken the extraordinary step, which also saw the document published to the City, to underline his intent, while denying his heavily discounted offer of 0.1p a share is a "bargain basement" price.
The third-generation Ross at the helm of the offshore oil, gas and renewables focused business, which also has a strong workwear arm, has acknowledged the frustration felt by some shareholders, and his deep personal involvement with the Grimsby-headquartered operation.
As exclusively revealed last week in the Grimsby Telegraph, Mr Ross has already put a further £5 million into the company to allow it to continue to trade, boosting confidence for customers and suppliers as his offer, with a deadline of December 20, is considered.
In the letter he said: "Without a sufficient inflow of finance into the business, the company's whole future is at stake and its options are extremely limited. The company's banks are not prepared to provide any further funds to the business.
"The funds I have committed during the offer period are repayable on December 22.
"If my offer is not accepted by shareholders, then unless any other offers of finance are provided to the company in the meantime, I do not believe the company has the ability to continue as a going concern."
Mr Ross already has millions invested in the company, and the support of the largest shareholder for his venture, giving him a known support base of more than 33 per cent.
But it is a tough pill to swallow for many, particularly as he has been in the chair as the share price has crashed, with alleged fraud involving part of the Scottish offshore operations, and a decline in trade when cashflow was constrained due to a pre-recession acquisition trail having previously been cited as the reasons for the fall from grace.
He said: "I am aware that the level of the offer is at a significant discount to the levels that the shares have historically traded at and that this is a frustration for you as shareholders, as some of you have expressed.
"However, this does not render my offer a 'bargain basement' price.
"To the contrary, I believe it fairly reflects the company's current difficult financial position, not least the expectation that the pressure on the group's cash flows will continue, and it is only part of the financial commitment, which I believe is required to secure the company's future."
2 Comments
by exaspect
Saturday, December 17 2011, 5:49PM
“If Mr Ross succeeds in taking Cosalt private for less that £1 million, when it was worth £40 million before he became chairman, do you think he will compensate shareholders 12 months from now when the company that he's acquired 100% ownership of posts record first year profits as a private company?
I predict this company will be worth £40 million plus within two years, netting Mr Ross a profit of around £20 million.
The company is in dire financial straights because the executive has spent £15 million over the last 12 months on legal fees, overpaid underperforming executive salaries (£1.5 million), but above all - restructuring costs which have effectively repackaged and prepared the company for relaunching into the private markektplace. In other words, multi-millions of shareholders funds have been utilised to shape up the company prior to Mr Ross making his tenth of a penny offer to buy the company. Company accounts verify ill-advised excessive expenditure including restructuring costs over the last 12 months - expenditure that Mr Ross will avoid paying when he takes the valeted Cosalt private. Nice one!”
by Unvrknw
Thursday, December 15 2011, 10:02AM
“Dear telegraph, as always I am happy to comment on the above article and the current offer underway for cosalt.
It's quite disturbing to read you are quite happy to list David as one of Grimsbys richest sons but then go on to describe an offer that discounts everyone's shares by over 85%.
Once again we talk of a potential improving business but that it has too much debt and only David can save it.
Very little written in the letter in regards to past performance, indeed very little willingness to discuss. This really bearing in mind the decline in cosalt performance is quite terrible.
A suggestion put forward is for Ross to treat his loans that are outstanding to cosalt and the amount he has invested in the company at a similar discount to us.
If mr Ross takes an 85% discount in money owned and investment then cosalt might not be in bad shape.
Whilst mr Ross has invested money and at current prices this shows a loss, he has everything to gain with the new private business.
A business that has record off shore revenue, renewables that are calling for Grimsby to be a hub for round 3 and workwear with record contracts.
Wow what a terrible place for mr Ross to be in. Ross has more money wrapped up in the business than anyone else, more therefore to loose but also to gain.
This business will turnaround and he will take the profit, gain and then want the hero status for saving it.
It is totally inappropriate that a chairman should put after the last 18 months shareholders in a position of accepting this offer or then trying to point the finger at us for causing administration.
This position has not been created now, it has been created over many years under the leadership of mr ross.
Financial loss to shareholders, job losses and the demise of coaslt has been lead by mr Ross and no one else, Ross recruits, guides and leads the team.
Once again telegraph, please ask mr Ross questions about mr Ross and our current situation, please stop just reporting what he would like and how he is only trying to save a business.
Ross is a hard nosed businessman who only in September talked of a fresh start and giving value back to shareholders.
This whole offer and circumstance is disgraceful. Mr Ross should take responsibility for all of us and not now try and buy a business on the side and quietly for his own gain.
Shareholders have everything to loose, there is no trust, no facts, no clarity of what and where cosalt is going.
The offer is purely based on fear of job losses and it should be highlighted clearly to the public and mr Ross.”