The chairman of struggling Grimsby-based company Cosalt has sent a letter to shareholders urging them to sell their shares to him, as time is running out for the company.
In the letter, David Ross, whose grandfather founded the oil and gas sector safety firm a century ago, said: "It is clear, I believe, that the company needs a significant level of further investment into it, shorn of the burden and cost that it has as a public company, in order for it to survive and to effect a turnaround of its fortunes."
He continued: "The funds I have committed during the offer period are repayable on 22 December 2011. 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."
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
A number of Cosalt shareholders believe that Ross is trying to buy the cash-strapped company on the cheap, but with Cosalt lacking the money to settle its debt with Ross, he appears to have them over a barrel.
Ross argues that, far from being a "bargain basement" bid, his 0.1p a share offer, which has been endorsed by independent members of the Cosalt board, "fairly reflects the company's current difficult financial position, not least the expectation that the pressure on the group's cash flows will continue."
Chairman since 2009, Ross recently established a new firm called Oval to buy Cosalt for around £400,000, which would see shareholders receive 0.1p in cash per Cosalt share.
Since then Ross has provided the firm with a £5m overdraft. The company, which has lost 94.5% on its share price over the past year, is near bankruptcy after taking on too much debt in the boom years up to 2008.
Emphasising his desire to see the company "restored to better days", he reminded shareholders they only have until 1pm on 20 December to make their decision.
The share price plunged 28.95% to 0.14p by 08:18.
NR
