COSALT chairman David Ross has warned shareholders that the firm faces imminent collapse if they do not accept his 0.1p-a-share offer for the business by December 20.
In a new letter to investors, Mr Ross said the company’s banks were unwilling to provide more funding and that without his support Cosalt was unlikely to stay in business.
He added: “Without a sufficient inflow of finance into the business, the company’s whole future is at stake and its options are extremely limited.
“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.”
Mr Ross also said he realised the level of the offer, which values the firm at £400,000, was a frustration for shareholders, but denied it was a bargain basement price. He added: “To the contrary, I believe it fairly reflects the company’s current financial position.”
Cosalt employs about 360 people, including 250 at its Aberdeen-based offshore division.
It said last Wednesday it had received a £5million short-term loan from Mr Ross to keep it afloat.
Mr Ross, who co-founded mobile-phone retailer Carphone Warehouse, is willing to extend the loan beyond December 22 if his takeover succeeds. His buyout offer expires two days before the loan repayment date.
His bid to take the UK-listed firm private came soon after Cosalt revealed net debt of £14million and a £9million pension fund deficit. It also said it could run out of money “within days”.
Mr Ross, who has provided Cosalt with £17.6million of funds, loans and guarantees in five years, said his offer was a lifeline for the company.
In his latest letter to shareholders, he said: “The very difficult financial position that the company finds itself in requires, in my opinion, a decisive and lasting solution to assure properly its future.
“I do not wish to dwell on the reasons that have led to this unhappy position but want to emphasise . . . that the reason behind my decision to bid for the company is to secure its future.”
“The company needs a significant level of further investment into it, shorn of the burden and cost that it has as a public company, for it to survive and to effect a turnaround of its fortunes.”