Cosalt, the Lincolnshire based company which provides life jackets and safety harnesses for the oil and gas industry, has said that it is continuing discussions with its lenders in an effort to find a solution to its financial difficulties, but warned the deficit on its pension scheme has grown.
The group's main defined benefit pension scheme is now believed to have "increased materially" above the £9.0m figure given at the end of 2010. The pension contribution holiday that was previously agreed with the group's pension trustees has expired and the group was due to recommence payments in October 2012. However, the company has been "unable to agree a recovery plan with the pension trustees" and "payments have not recommenced".
The firm currently has debt levels of about £17m in bank loans and working capital facilities, with these facilities expiring on December 31st 2012.
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The company issued a statement on Monday 31st which said: "The group has continued to incur operating losses during 2011 and 2012 and its operating businesses are only able to continue normal operations with the support of working capital facilities provided by David Ross and Oval Limited.
"However, at the time of the offer made by Oval Limited on November 25th 2011, the independent directors [...] explained the uncertainty facing the group owing to its trading prospects and funding position, that key shareholders had been consulted, but were not prepared to inject further equity and that other courses of action, such as the sale of some of the company's remaining assets or businesses, did not present a viable alternative to the offer as they would be unlikely to produce any value for shareholders due to the level of the group's net indebtedness. This remains the company's belief."
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