OFFSHORE ENGINEERING and safety firm Cosalt has admitted that it faces debts of £17 million and a multi-million pound pensions shortfall as it continues to rely on the financial clout of chairman David Ross.
The group which employs around 250 people in the north east of Scotland said a £9m pension pot deficit was sure to have grown since it last calculated the figure some two years ago, and warned that it had been unable to restart contributions as previously planned.
Cosalt, which has its headquarters in Grimsby, has been trading at a loss for some time and on Monday repeated a warning that its borrowing facilities were due to expire at the end of 2012.
Lenders include two banks, Mr Ross, a company controlled by Mr Ross, and another, unrelated, creditor.
“Cosalt has been and remains in discussions with its lenders and also the trustees of the group’s main defined benefit pension scheme with regard to a solution to the group’s financial difficulties, and expects those discussions to continue in the new year,” the company said in a statement to the markets.
The firm had previously agreed a pension contribution “holiday” with its fund’s trustees, with payments proposed to recommence in October.
But this, the company admitted, had not been possible.
Trading in the firm’s shares was suspended earlier last year after it failed to file accounts for 2011.
Mr Ross has sought to take the firm back into private ownership, and, through wholly-owned vehicle Oval, has made two offers to take on Cosalt’s entire issued and to-be-issued share capital.
The chairman previously warned Cosalt shareholders that he believed the firm did not “have the ability to continue as a going concern” unless they accepted his takeover proposals.
And Mr Ross’s warning was repeated on Monday, with a company statement making it clear the firm does not regard any sale of assets or businesses as “a viable alternative” to the chairman’s offer, adding such a course of action would be unlikely to produce any return for shareholders.
Cosalt hit the news headlines in 2010, after it launched a legal battle against former Dundee FC director Calum Melville and his brother Stuart.
Its Aberdeen-based offshore arm had been established in 2007 after the Melvilles sold their previous company, GTC, to the Yorkshire group for an estimated £30 million.
Calum Melville was taken on as head of the division, and was also given a position on the board.
His brother was employed as operations director.
But the pair were suspended from their high-ranking jobs when the oil services firm began a investigation after claiming to have uncovered a series of “doubtful transactions” involving a supply company.
The brothers later resigned.
A long-running court face-off came to an end in September when both parties agreed a £2 million out-of-court settlement with no admission of liability.
At the time, chief executive Trevor Sands said the deal was “construed as being in the best interests of all Cosalt shareholders.”
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