Cosalt PLC Update on Disposals and Financial Position (3192X)
2013年2月7日 - 4:00PM
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RNS Number : 3192X
Cosalt PLC
07 February 2013
Cosalt plc
Update re disposals and financial position
Cosalt plc ("Cosalt" or "Company") provides the following update
regarding the potential disposals of its main operating businesses
("Disposals") and its discussions with lenders and the trustees of
the Cosalt Group's main defined benefit pension scheme ("Pension
Trustees").
The Disposals
The Company is in discussions with potential buyers of its two
main operating businesses, Cosalt Workwear and Cosalt Offshore. As
reported previously, the Directors continue to believe that the
Disposals would not result in any value being attributable to
shareholders due to the level of the Group's net indebtedness and
pension scheme liabilities, and it is the Directors' opinion that
the disposal of each of these businesses as a going concern remains
the best way of ensuring their long term future, safeguarding jobs,
and ensuring continuity of service both to customers and to
suppliers. In reaching their opinion, the Directors have considered
their wider fiduciary duties and have acknowledged the important
role of these two businesses, both within their industries and
within their local communities.
In view of the respective sizes, each of the Disposals would
constitute a Class 1 transaction for the purpose of the Listing
Rules and would therefore, for so long as the Company remains
subject to the Listing Rules and in the absence of the Company
being eligible to obtain a dispensation from the requirements of
the Listing Rules, require shareholder approval.
Consent to the Disposals would also be required from the Group's
lenders (as detailed below) and Pension Trustees. Due to the
timeframe involved in the Disposals, and in particular the time
required to seek shareholder approval, the support of the lenders
would also be required to enable the Group to continue to trade
whilst shareholder approval is sought.
Discussions with lenders and Pension Trustees
The Cosalt Group had net borrowings of approximately GBP17m as
at 31 December 2012 and the Company has been in discussions with
its lenders and the Pension Trustees with regard to a solution to
the Group's financial position. The facilities provided by each of
The Royal Bank of Scotland plc and HSBC Bank plc (together the
"Banks"), Sovereign Holdings Limited ("Sovereign"), David Ross (a
director of the Company) and Oval (2245) Limited ("Oval"), a
company controlled by Mr Ross, expired on 31 December 2012. The
Banks and Pension Trustees have security over the Group's assets.
In addition, the Banks have the benefit of guarantees provided by
Mr Ross and Sovereign which expire on 31 March 2013 ("Bank
Guarantees").
A summary of the latest position with each of the relevant
parties is as follows:
-- No agreement has been reached with the Pension Trustees in
relation to the resumption of payments to the Group's main defined
benefit scheme. The amounts which would ultimately be payable would
not be determined until a recovery plan acceptable to the Pensions
Regulator was agreed with the Pension Trustees. However, the
Pension Trustees have previously indicated to the Company that
annual payments of the order of GBP2.1 million might be required
over a 28 year period.
-- Oval and Mr Ross have not yet made any demand in relation to
the repayment of their facilities. Indeed, whilst no agreement has
been reached in relation to the extension of those facilities, the
Company has continued to make drawdowns under the working capital
facilities.
-- Sovereign has demanded repayment of its loan of GBP1m but to
date has taken no further action.
-- Having to date reserved their position in relation to their
facilities, the Banks have now written to the Company raising
concerns that the Directors have expressed an intention to pursue
what the Banks describe as an expensive and lengthy process to seek
shareholder approval for the Disposals, and whether under those
circumstances there would be sufficient funds available to the
Group to continue to trade until the Disposals are completed, given
the expiry of the facilities on 31 December 2012 and the expiry of
the Bank Guarantees on 31 March 2013. The letter also sets out a
series of conditions which the Company is required to meet in order
to avoid the Banks enforcing their security on or before 28
February 2013.
The conditions required by the Banks (if they are to consider an
alternative course of action to enforcing their security on or
before 28 February) include that the Company must have funding from
lenders other than the Banks in place to meet the costs associated
with seeking shareholders' approval in a manner which does not
reduce realisations from the Disposals and to fund any losses and
working capital requirements of the Group's business from 4
February up to completion of both of the Disposals. In addition,
they require that Mr Ross and Sovereign extend the expiry date of
the Bank Guarantees to a date beyond the expected date of the
Disposals.
The Company has had and continues to have extensive discussions
with existing and potential funders but no alternative source of
funding is currently available to the Group. In the event that the
Banks conditions cannot be met, in the absence of the Banks
agreeing an alternative course of action to enforcing their
security, the Directors consider that Cosalt plc (the parent
company of the Cosalt Group) would be likely to enter insolvency
proceedings on or before 28 February 2013.
ENDS
Enquiries:
Cosalt plc Tel: +44 (0) 1472 725560
Trevor Sands, Chief Executive
Officer
Cardew Group Tel: +44 (0) 207 930 0777
Tim Robertson / Tom Horsman
This information is provided by RNS
The company news service from the London Stock Exchange
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