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NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO THE SAME WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
FOR IMMEDIATE RELEASE
(" Cosalt" or "the Company" or "the Group")
ANNOUNCEMENT OF A POSSIBLE OFFER UNDER RULE 2.4 OF THE TAKEOVER CODE AND INTERIM MANAGEMENT STATEMENT
The Board of Cosalt confirms that it has received an approach from Mr. David Ross, the Company's Non-executive Chairman, which may or may not lead to an offer being made for the entire issued share capital of the Company. In the context of the continuing difficulties facing the Company and the challenging funding environment, Mr Ross believes that the Company may be more readily recapitalised and moved forward as a private business and has indicated that he would be prepared to pay 0.1 pence for each ordinary share in issue. Mr Ross has also confirmed his ongoing support for the Company, in which Mr Ross's family has had an interest for over 50 years, and is currently providing debt funding to the Company alongside Cosalt's banking partners. Mr Ross has also indicated that should an offer be put forward and he acquire control of Cosalt, it is his intention to provide additional capital investment to expand the Group's existing businesses for the benefit of the Group's customers and other stakeholders.
The Board has agreed that Mr Ross should not be involved in any discussions in relation to the possible offer and a committee of the independent directors of the Board, comprising Maurice White, Kenneth Murray and Yarom Ophir ("the Independent Directors") has therefore been established. The Independent Directors are considering Mr Ross' approach in the context of the Company's current financial condition, expected future trading and the feasibility of other available options.
This announcement, which has been made with the consent of Mr Ross, does not amount to a firm intention to make an offer, and accordingly, there can be no certainty that any offer will be made. Shareholders of Cosalt should take no action at this time. A further announcement will be made in due course.
The attention of shareholders is drawn to the disclosure requirements of Rule 8 of The City Code on Takeovers and Mergers (the "Code"), which are summarised below.
In accordance with Rule 2.6(a) of the Code, Mr Ross is now required, by not later than 5.00 p.m. on 15 December 2011, to either announce a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Code or announce that he does not intend to make an offer, in which case, the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline can be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.
Interim Management Statement
Cosalt announces its interim management statement in respect of the period from 1 July 2011 to 16 November 2011.
During the period, the delayed sale of Cosalt's Marine division to Survitec was finally completed on 26 August 2011 and generated proceeds of £27 million, which were applied to reduce the Company's bank debt. Immediately following the sale of Marine, net indebtedness stood at £7.3 million.
Since that date, trading has continued to be challenging and a trading update was announced on 19 October 2011, stating that the Group's trading for the year to 31 December 2011 was expected to be significantly lower than the Board's previous expectations and that the Board had instigated a full review of the Group's operations and future funding requirements. The review is still ongoing.
Pressure has continued, since the October announcement, on the Group's cashflows and financial position. The Group currently has net indebtedness of £12.3 million (bank borrowings of £8.8 million and shareholder and other loans of £3.5 million) and management is maintaining an ongoing dialogue with the Company's lenders. The Board is now of the view that the Company may well utilise its available facilities, of £14.9 million, in full before the end of the current financial year.
During the period, external trading conditions in the Group's Offshore and Workwear markets continue to improve, however, the Group has been unable to fully capitalise on this, primarily due to the pressure on working capital.
Mr Ross has also agreed to grant a personal guarantee in the sum of £0.3 million by way of security for costs in relation to Cosalt's ongoing litigation with the Melvilles.
Advisers to Cosalt
Evolution Securities Limited Tel: +44 (0) 113 2431619
Joanne Lake / Peter Steel
Cardew Group Tel: +44 (0) 207 930 0777
Tim Robertson / Sophie Leigh Pemberton
Advisers to Mr Ross
WH Ireland Limited (Financial Adviser) Tel: +44 (0) 207 220 1698
RLM Finsbury Tel: +44 (0) 207 251 3801
Rule 2.10 Requirement
In accordance with Rule 2.10 of the Code, Cosalt confirms that, as of the date of the announcement, it has in issue 404,403,397 ordinary shares of one pence each. The International Securities Identification Number ("ISIN") number of the ordinary shares is GB0002265055.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
Evolution Securities, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Cosalt and for no one else in connection with the possible offer and will not be responsible to anyone other than Cosalt for providing the protections afforded to clients of Evolution Securities nor for providing advice in relation to the possible offer or any other matters referred to in this announcement.
A copy of this announcement will be available on the website of the Company at www.cosalt.com.
References to Mr Ross in this announcement include, where relevant, references to the corporate vehicle that Mr Ross would ultimately use to effect any offer.
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