Cosalt, take the gag off

On 7 February 2013 Cosalt announced that Cosalt Wind Energy would cease trading.

Cosalt Wind Energy (CWE) is the UK arm of Apro Wind, a Danish service provider to the wind farm industry with contracts all over Europe. http://apro-wind.com/ Apro Wind are currenty adverising for jobs in Denmark (28th Jan). http://www.offshorewind.jobs/job_vacancies/job_details/139844/apro_wind_as_technicians

Cosalt is 80% owner of CWE having acquired it from APRO in July 2010 for an initial payment of £200,000 plus a deferred consideration of up to £430,000 depending upon the trading performance in the year ending 31 December 2011. http://www.stockmarketwire.com/article/3912279/Cosalt-in-wind-energy-JV-with-APRO.html

CWE has (had?) a framework agreement with Siemens to supply specialist engineers for its offshore wind turbine activities around the UK.

According to the recent RNS, CWE had sales of £483,082 and losses of £119,973 for the period to end Oct 2010, and sales of £932,002 and losses of £503,221 for the period end Dec 2011. Net liabilities of £623,094. Accounts have been prepared on a none going concern basis but are not yet available from Companies House.

Since 31 December 2011, sales have reduced and CWE has continued to incur losses. CWE owed £632,882 to Cosalt plc at end Dec 2011 and this has risen to approximately £812,000 at end Dec 2012.The directors (Trevor Sands, Rod Buchan and two reps from Apro) have decided that CWE should cease trading.

Questions about CWE

What effect does ceasing trading have? It won't be able to generate the income to repay the debt to Cosalt. It will stop accumulating losses but only if jobs are lost. If employees are reassigned to Offshore the parent company will continue to bear the costs so no savings. Have people been made redundant?

Why isn't the business up for sale with Cosalt Offshore and Cosalt Workwear? If liquidators were called in they would sell it, does making it dormant now prevent that? Is it up for sale but no shareholder approval required?

What is the value of the business now? Cosalt paid up to £630k, have admitted to having run the business down, no value unless the framework agreement still stands. Cosalt would want to clear debt, £812k, but what value have they added? Like the rest of Cosalt, now worth a small fraction of what it was in July 2010 when valued at £630k. Need to see the full accounts.

Is ceasing to trade in the best interest of shareholders, stakeholders? Is it because of or in breach of insolvency rules?

Some good info in this thread.

This looks to my uneducated financial eyes as,a back door takeover without the shareholders having a vote.Reason is,the loans can/could be extended for say two or three years,this saves Cosaltand the employees,simple,no,Cosalt chairman never asked the Humberside Local Enterprise Partnership for deveopment funding or grants,Stranger still David Ross is the Vice Chairman of HLEP.With over £5M in loans to Cosalt via Oval(100% owned by D Ross)at over 8% interest charges.This could lead to "Indepenence" conflict of interest.This is all in the Cosalt records,but as without accounts for over two years we will have to wait while the Regulator takes action.All IMO.

RNS:

into admin, sorry guys

It's no great surprise that it's come to this but what's happened here should serve as a warning to all investors in listed companies, whatever their size, in the UK.

The administrators are selling the two main subsidiaries as going concerns and there will be nothing for shareholders due to the main company debt.

The debt is nothing too excessive for a company this size, £17M, but "the Company" have been unable to negotiate an extension of the debt agreement which expired on 31st December.

In my opinion the company didn't want too. Since David Ross tried and failed to take it private at the start of last year it seems to have been his prime aim, to get back at the shareholders who denied him.

The banks agreed to lend £11.4M to December 2012, about half of it guaranteed by Ross for which he's being paid a monthly fee of more than £32k. Ross loaned the rest himself. Because he won't extend his guarantee or loan, the banks won't (can't) extend theirs and have had to call in the administrators.

I'll probably be banned for saying that and this thread will be removed as defamation against Ross, which is why we had our board closed down here, the administrators are being threatened with legal action.

So in the end the employees get saved, shareholders lose, all because the supposed rich man at the top didn't get his own way. Beware of investing in companies with a single, powerful, Chairman, at thend of the day they're in it for themselves and the UK legal system allows them to dictate what they want.

Cosalt haven't filed results since y/e Dec 2010, being suspend since May 2012 but having no action taken against the company for it's failings. Now, under administration, it doesn't have to file those results, so the Directors are not accountable to shareholders, past or present, for what they've done since Jan 2011.

Administrators can dredge up any wrongdoings if they choose, but they're being paid by the company & banks not the shareholders, so they have little incentive to do so.

I do expect this to be my last post here but the fight goes on to make the directors of Cosalt accountable in private.

To admin at LSE:

I know you couldn't talk about why the Cosalt chat board was suspended back in December but now that they've gone into admin & been delisted is there any chance of an explanation, just for the sake of completion?

I also would like to know this