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("Cosalt" or "the Group")
Update on Financial Position and Banking Facilities
Cosalt plc (the "Company") provides the following update on its financial position.
As at today's date the Cosalt Group has net indebtedness in bank loans and working capital facilities of approximately £17m. As reported previously, these facilities, all of which are due to expire on 31 December 2012, are provided by two banks, David Ross (a director of the Company), Oval (2245) Limited (a company controlled by David Ross) and one unrelated lender. 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 Group's main defined benefit pension scheme was reported as having a deficit of approximately £9m when last reported in the financial results for the year ended 31 December, 2010. The directors believe this figure will have increased materially since then although no formal up to date valuation is available to them. The pension contribution holiday agreed previously 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 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 (2245) Limited. However, at the time of the offer made by Oval (2245) Limited on 25 November, 2011, the Independent Directors (as defined in the offer document relating to that offer) 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.
Further announcements will be made as appropriate.
Trevor Sands, Chief Executive Officer
Tel: +44 (0) 1472 725560
Cardew Group Tel: 07900 927650
Tim Robertson / Tom Horsman
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