6 Aug 2009 07:00
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL
Cosalt plc
("Cosalt" or "the Group")
Placing and Open Offer and Firm Placing to raise £18.9 million gross
Cosalt plc, the leading provider of critical safety equipment and services for the Offshore Oil & Gas and Marine industries, proposes to issue 180,000,000 New Ordinary Shares through the Placing and Open Offer and to issue 198,000,000 New Ordinary Shares through the Firm Placing, at the issue price of 5 pence per share to raise, in aggregate, £18.9 million (approximately £17.1 million net of expenses).
Highlights
Placing and Open Offer and Firm Placing to raise £18.9 million at a price of 5 pence per share;Admission of the Shares to the LSE is expected to take place on 2 September 2009.
David Hobdey, Chairman, said:
"The fund raising is a key milestone for Cosalt and represents a new chapter in our development. Above all, it provides the Group with the financial stability and security to both conduct business on a normalised basis and to pursue our growth strategy with a strengthened balance sheet. "With increasingly stringent regulatory requirements concerning safety and protection, we are in an excellent position to actively extend our comprehensive range of products and services, and to take advantage of those requirements, for both the offshore and marine markets.
"The Board is confident of the long term prospects for Cosalt and believes the Group is well placed to take advantage of both specific opportunities in its offshore and marine markets and a general upturn in economic activity."
6 August 2009
For further information, please contact:
| Cosalt plc | Today: 020 7457 2020 |
| Mark Lejman, Chief Executive | Thereafter: 01472 504 504 |
| Mike Reynolds, Finance Director |
|
| Evolution (Joint Sponsor and Broker) | Tel: 020 7071 4317 |
| Tim Worlledge | |
| Joanne Lake | |
| Noble Grossart (Joint Sponsor and Financial Advisor) | Tel. 0131 226 7011 |
| Guy Stenhouse | |
| David Harraghy | |
| College Hill | Tel: 0207 457 2020 |
| Mark Garraway | |
| Adam Aljewicz |
General
This Announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, Japan or South Africa or any other jurisdiction into which the same would be unlawful.
This Announcement does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, the New Ordinary Shares or any other securities to any person in Australia, Canada, Japan or South Africa, or the United States or in any jurisdiction to whom or in which such offer or solicitation is unlawful. Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada, Japan or South Africa or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada, Japan or South Africa. The offer and sale of the securities referred to herein has not been and will not be registered under the US Securities Act or under the applicable securities laws of Australia, Canada, Japan or South Africa. The availability of the Placing and Open Offer and Firm Placing to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Such persons should inform themselves about and observe any application requirements.
The New Ordinary Shares have not been and will not be registered under the US Securities Act or under the securities laws of any state or other jurisdiction of the United States or under any securities laws of Australia, Canada, Japan or South Africa or any other jurisdiction where to do so would be unlawful and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States, or within any of Australia, Canada, Japan or South Africa or any other jurisdiction where to do so would be unlawful. There will be no public offer of the New Ordinary Shares in the United States.
The distribution of this Announcement and the offering of the New Ordinary Shares in jurisdictions other than the United Kingdom may be restricted by law. No action has been taken by the Company, Evolution or Noble Grossart that would permit an offering of such shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company, Evolution and Noble Grossart to inform themselves about, and to observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
This Announcement is for information only and does not constitute or form part of any offer or invitation to issue, acquire or dispose of any securities or investment advice in any jurisdiction.
This Announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any New Ordinary Shares referred to in this Announcement in connection with Placing and Open Offer and Firm Placing except on the basis of information to be contained in the Prospectus expected to be published on 6 August 2009 by the Company in connection with the proposed Placing and Open Offer and Firm Placing. Copies of the Prospectus will be available from the Company's registered office.
This Announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied is, or will be made as to, or in relation to, and no responsibility or liability is, or will be, accepted by either Evolution or Noble Grossart or by any of their affiliates or agents as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.
Evolution, which is authorised and regulated by the Financial Services Authority ("FSA") in the United Kingdom, is acting exclusively for the Company as Joint Sponsor and broker in connection with the Placing and Open Offer and Firm Placing and Admission and will not be responsible to anyone other and other matters referred to in this Announcement than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing and Open Offer and Firm Placing or any other matters referred to in this Announcement.
Noble Grossart, which is authorised and regulated by the FSA in the United Kingdom, is acting exclusively for the Company as Joint Sponsor and financial advisor in connection with the Placing and Open Offer and Firm Placing and Admission and other matters referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing and Open Offer and Firm Placing or any other matters referred to in this Announcement.
This Announcement contains forward-looking statements which reflect the Group's or, as appropriate, the Directors' current views with respect to financial performance, business strategy, plans and objectives of management for future operations (including development plans relating to the Company's products and services). These statements include forward-looking statements both with respect to the Group and the sectors and industries in which the Group operates. Statements which include the words "expects", "intends", "plans", "believes", "projects", "anticipates", "will", "targets", "aims", "may", "would", "could", "continue" and similar statements of a future or forward-looking nature identify forward-looking statements.
All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause the Group's actual results to differ materially from those indicated in these statements. Any forward looking statements in this Announcement reflect the Group's current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the Group's operations, results of operations, growth strategy and liquidity.
These forward-looking statements speak only as of the date of this Announcement. Subject to any obligations under the Prospectus Rules, the Disclosure and Transparency Rules or the Listing Rules and save as required by law, the Company undertakes no obligation to update publicly or to review any forward-looking statement, whether as a result of new information, future developments or otherwise. All subsequent written and oral forward-looking statements attributable to the Company or individuals acting for and on behalf of the Company are expressly qualified in their entirety by this paragraph. Prospective investors should specifically consider the factors identified in the Prospectus which could cause actual results to differ before making an investment decision.
Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. Any indication in this Announcement of the price at which the Ordinary Shares of the Company have been bought or sold in the past cannot be relied upon as a guide to future performance. No statement in this Announcement is intended to be a profit forecast.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE
Placing and Open Offer and Firm Placing
1. Introduction
Cosalt announces that it proposes to raise £18.9 million (approximately £17.1 million net of expenses) by way of a Placing and Open Offer and Firm Placing in order to enable the Company to reduce the Group's net financial indebtedness and to give the Group additional financial flexibility by strengthening its balance sheet.
The price represents a discount of approximately 84 per cent to the closing mid market price of 31p per Ordinary Share prevailing on the London Stock Exchange on 5 August 2009 (the last business day prior to the date of this announcement). The issue of the Placing and Open Offer and Firm Placing Shares will represent an increase of approximately 1,432 per cent in the issued share capital of the Company.
The Placing and Open Offer and Firm Placing is conditional on the approval of Shareholders. Accordingly, Shareholders will shortly be sent a prospectus setting out the details of the Placing and notice of a General Meeting convened for 10.00 a.m. on 1 September 2009.
2. Background to and reasons for the Placing and the Open Offer and Firm Placing
Cosalt's operations are focused on the provision of critical safety equipment and services for the offshore oil and gas and marine industries. Its core safety and protection business has been given increased focus by the creation of two divisions: Cosalt Marine, serving the commercial and cruise industries and Cosalt Offshore, serving the offshore oil and gas industry.
The Directors believe that the Company is making good progress in implementing its strategy to become a leading global provider of safety and protection services and products for people exposed to hostile environments.
The Group has, however, recently reported a degree of volatility in current trading and in its Interim Report for the 27 weeks ended 3 May 2009, reported turnover of £52.9 million (26 weeks ended 27 April 2008: £49.6 million) and, following various exceptional costs and write downs totaling £3.9 million, a loss before taxation after Special Items of £3.4 million (26 weeks ended 27 April 2008: £0.8 million profit).
Cosalt is seeking to raise approximately £17.1 million (net of expenses) from the Placing and Open Offer and Firm Placing. The proceeds will be applied in the first instance to repay (i) £3 million of the Group's £6 million 364 day credit facility (to be converted into a term loan upon completion of the fundraising); and (ii) £3 million of the existing term loan. The remainder of the net proceeds of £11.1 million will be applied to reduce current borrowings under Cosalt's revolving credit facility and therefore provide additional working capital headroom. HSBC and RBS have agreed, subject to the Placing and Open Offer and Firm Placing proceeding, that the remaining balance of £3 million outstanding under the converted 364 day credit facility will be due for repayment in January 2011. HSBC and RBS have also agreed to amend the existing financial covenants over Cosalt's Debt Facilities. These changes will provide the Group with a more appropriate capital structure given the prevailing economic climate and additional headroom on the financial covenants under its Debt Facilities.
In the event that the Placing and Open Offer and Firm Placing do not proceed, the Group is likely to have breached the leverage covenant in its Debt Facilities at the next quarterly test date of 31 July 2009, the most recent test date under the existing arrangements.
The funds will enable the Company to reduce the Group's net financial indebtedness and to give the Group additional financial flexibility by strengthening its balance sheet.
3. Indicative Proposals
During the course of Cosalt's preparation for the Placing and Open Offer and Firm Placing and as announced on 3 August 2009, Cosalt has received proposals from third parties, including approaches indicating that the parties concerned would potentially be interested in making offers for the entire issued share capital of Cosalt. These proposals are non-binding and conditional and there can be no certainty that any of the proposals received will lead to a formal offer or other finite proposition which is capable of being recommended to Shareholders by the Board.
In considering these proposals and in particular the uncertainty as to whether or not they will progress to a satisfactory conclusion, the Board has had regard to the urgent need to address the financial position of the Company, as explained more fully in paragraph 10 of this Announcement. The view of the Board is that the Company's urgent requirement for additional capital must have priority over these other proposals and that the Placing and Open Offer and Firm Placing should proceed and the formal recommendation of the Board is set out in paragraph 12 of this Announcement.
Following the announcement by the Board on 3 August 2009 of the receipt of proposals from third parties that may lead to possible offers for the entire issued share capital of Cosalt, the Company is deemed to be in an offer period pursuant to the City Code. Accordingly, Rule 21 of the City Code requires Shareholders' consent to the Board proceeding with the Placing and Open Offer and Firm Placing as the entry into and implementation of the Placing and Open Offer and Firm Placing may be deemed to constitute action which may result in any offer or bona fide possible offer being frustrated, or in Shareholders being denied the opportunity to decide on its merits.
Accordingly, a resolution will be put to Shareholders seeking Shareholders' approval for the Board to proceed with the Placing and Open Offer and Firm Placing for the purposes of Rule 21 of the City Code.
4. Current trading and prospects
As a result of the pressure on trading in the first half of the current financial year, the Board has taken action to remove cost from the business and is implementing a programme of measures to reduce Group overheads by approximately £3 million per annum on an ongoing basis. The Board now expects a gradual increase in activity levels. Despite the difficult conditions, Cosalt Marine's performance as reported in the Interim Report represented an improvement over the same period in 2008. In the oil and gas sector in particular, Cosalt Offshore has also seen a recovery in order levels going into the second half of the current financial year. The Board is confident of the long term prospects for Cosalt and has identified the following specific drivers of revenue growth and margin improvement:
Cosalt Offshore
the recently announced agreement with a specialist rope manufacturer, Bridon, will enable Cosalt to start to access the £30 million UK market for wire rope;
lifeboat inspection has recently been introduced as a new service by Cosalt Offshore;
Cosalt Compliance was launched in May 2009 to help ensure customers comply with the growing burden of health and safety legislation governing technical lifting equipment and its maintenance;
tooling facilities have recently been introduced at Cosalt Offshore's Stavanger site in Norway and are to be fully rolled out shortly;
Cosalt Offshore will have the opportunity to tender in the next year for a number of significant contracts that it does not currently hold;
non-destructive examination of wire rope is being introduced in the current year as a new service and discussions to date indicate significant interest from existing Group customers; and
the Directors are also at the planning stage of extending Cosalt Offshore's services to oil and gas rigs off the coast of Central Norway.
Cosalt Marine
a new fire protection service has been made available to customers in Germany and Spain and is planned to be introduced imminently in Italy;
the supply of life jackets for new-build vessels in the cruise liner sector, an area where the Group has a strong track record, with typical requirements being 4,000 - 5,000 units per vessel;
the supply of life jackets to the oil and gas industry outside the North Sea; and
recent investment by HM Government in the Royal Navy carrier programme is expected to yield additional stores, tooling, lifting and rigging equipment contracts for the Group.
5. Key Strengths
The Directors believe that the Group has a number of key strengths including the following:
strong management team, both at main Board and second-tier levels within Cosalt Offshore and Cosalt Marine;
defensive, legislation-governed, end-markets driven by customers' obligations to comply with relatively stringent and complex legislation;
Cosalt's larger scale and wider geographical spread of locations relative to its competitors; and
a restructured and focused business now wholly focused on the marine and offshore markets.
6. Dividends and dividend policy
Following the recent volatility in trading, the Board will not be recommending an interim dividend.
The Board remains committed, however, to a progressive dividend policy and Cosalt will resume dividend payments when markets stabilise and it believes it is prudent to do so, taking into account the Group's earnings, cashflow and balance sheet position.
7. Details of the Placing and Open Offer and Firm Placing
The Company is proposing to issue 180,000,000 New Ordinary Shares through the Placing and Open Offer and to issue 198,000,000 New Ordinary Shares through the Firm Placing, in each case, at the Placing Price of 5 pence, raising, in aggregate, £18.9 million (approximately £17.1 million net of expenses).
The Placing Price of 5 pence per New Ordinary Share represents a discount of 83.87 per cent. to the closing price of 31 pence per Ordinary Share at 5 August 2009 (being the last trading day prior to announcement of the Placing and Open Offer and Firm Placing).
The Company is required under the Listing Rules to seek approval generally from the Shareholders for the Placing and Open Offer and Firm Placing because the Issue Price represents a discount of greater than ten per cent. to the Closing Price. The Directors are therefore putting forward an appropriate Resolution at the General Meeting.
The Directors have given a great deal of thought as to how to structure the proposed equity fundraising, having regard to current market conditions, the level of the Company's share price and the importance of pre-emption rights to Shareholders. The Directors have concluded that the Placing and Open Offer and Firm Placing is the most appropriate structure and Qualifying Shareholders are therefore, subject to the terms and conditions of the Open Offer, being given the opportunity under the Open Offer to apply for the Open Offer Shares at the Issue Price on the following basis:
6.8173 Open Offer Shares for each Existing Ordinary Share
up to a maximum of their pro rata Open Offer Entitlement.
As indicated in paragraph 10 of this Announcement, it is very important to the Company that the Placing and Open Offer and Firm Placing is completed in order to secure the financial position of the Group.
The Board is of the view that it is necessary, to ensure the success of the Placing and Open Offer and Firm Placing, to enable new investors to participate and for this reason approximately 52 per cent. of the New Ordinary Shares are to be placed firm with new investors as well as certain existing investors who have confirmed their support for the Placing and Open Offer and Firm Placing. Furthermore, having regard to the current market conditions, the current financial position of the Company and the results of an extensive marketing exercise, the Board has concluded that, notwithstanding the significant discount to the current share price, it is necessary for the New Ordinary Shares to be issued at a price of five pence per New Ordinary Share in order to raise £18.9 million under the Placing and Open Offer and Firm Placing.
The Firm Placed Shares have been placed with certain existing Shareholders as well as new institutional investors and are not subject to clawback and do not form part of the Open Offer. Evolution has conditionally placed the Open Offer Shares with institutional investors subject to clawback to satisfy valid applications from Qualifying Shareholders under the Open Offer. Following the issue of the New Ordinary Shares, Qualifying Shareholders who take up their full Open Offer Entitlement will suffer dilution of up to 48.96 per cent. as to their interests in the Company. Shareholders who do not take up any of their Open Offer Entitlements in respect of the Open Offer will suffer dilution of up to 93.47 per cent. as to their interests in the Company.
The Placing and Open Offer and Firm Placing are conditional, inter alia, on Admission.
Of the Placing Shares, 198,000,000 new shares (52% of the Placing Shares) have been conditionally placed firm with investors and 180,000,000 new shares (48% of the Placing Shares) have been conditionally placed subject to qualifying Shareholders taking up their entitlements under the Open Offer. Under the terms of the Open Offer, Shareholders are being given the opportunity to apply for shares at the Issue Price on the basis of 6.8173 Open Offer Shares for each Existing Ordinary Share.
8. Information on the Capital Reorganisation
It is proposed that the Placing and Open Offer and Firm Placing will be undertaken at 5 pence per New Ordinary Share, which is less than the current nominal value of an Ordinary Share. Under the Companies Act, it is not permissible to issue shares at a discount to their nominal value. Therefore, in order to enable the Company to proceed with the Placing and Open Offer and Firm Placing and to provide the Company with flexibility in relation to its capital structure in the future, the Placing and Open Offer and Firm Placing is conditional on, amongst other things, the completion of the Capital Reorganisation, which will result in the nominal value of each Ordinary Share being reduced to one pence
9. Information on the Related Party Transactions
Sovereign Holding holds approximately 22.31 per cent. of the Ordinary Shares. 28,000,000 New Ordinary Shares will be issued to Sovereign Holding pursuant to the Firm Placing and this, due to their holding of Existing Ordinary Shares being in excess of 10 per cent. of the Existing Ordinary Shares, constitutes a related party transaction under the Listing Rules.
David Ross holds approximately 15.11 per cent. of the Existing Ordinary Shares. 22,200,000 New Ordinary Shares will be issued to Mr Ross pursuant to the Firm Placing and this, due to (i) him being a director of Cosalt; and (ii) his holding of Existing Ordinary Shares being in excess of 10 per cent. of the Existing Ordinary Shares, constitutes a related party transaction under the Listing Rules.
Hanover Investors holds approximately 8.12 per cent. of the Existing Ordinary Shares. 10,000,000 New Ordinary Shares will be issued to Hanover Investors pursuant to the Firm Placing and this, due to their holding of Existing Ordinary Shares having been in excess of 10 per cent. of the Existing Ordinary Shares within the last 12 months, constitutes a related party transaction under the Listing Rules.
Stuart Melville holds approximately 5.72 per cent. of the Existing Ordinary Shares. 5,000,000 New Ordinary Shares will be issued to Mr Melville pursuant to the Firm Placing and this, due to him being a director of certain of Cosalt's subsidiary undertakings, constitutes a related party transaction under the Listing Rules.
4,200,000 New Ordinary Shares and 400,000 New Ordinary Shares will be issued to Mark Lejman and Mike Reynolds respectively pursuant to the Firm Placing. Mr Lejman and Mr Reynolds are directors of Cosalt. Therefore, the issue of New Ordinary Shares to each of them pursuant to the Firm Placing constitutes a related party transaction pursuant to the Listing Rules.
Shareholder approval is required with regard to these related party transactions. None of Sovereign Holding. David Ross, Hanover Investors, Stuart Melville, Mark Lejman, Mike Reynolds or their associates will vote on the relevant Resolutions at the General Meeting seeking Shareholder approval of the Related Party Transactions.
10. Working Capital and Importance of the Vote
The Company is of the opinion that, taking into account the net proceeds of the Placing and Open Offer and Firm Placing and the bank and other facilities available to the Group, the Group has sufficient working capital for its present requirements, that is for at least 12 months from the date of publication of this document. The net proceeds from the Placing and Open Offer and Firm Placing will be used to reduce the Group's net financial indebtedness under the Debt Facilities extended to the Group by HSBC and RBS. In particular, the net proceeds will be applied in the first instance to repayment of (i) £3 million of the Group's £6 million 364 day credit facility (to be converted into a term loan upon completion of the fundraising); and (ii) £3 million of the existing term loan. The remainder of the net proceeds of approximately £11.1 million will be applied to reduce current borrowings under the revolving credit facility.
Conditional upon the Placing and Open Offer and Firm Placing proceeding, HSBC and RBS have agreed (a) to defer the date of the next quarterly test of the leverage covenant under the Group's Debt Facilities from 31 July 2009 to 31 August 2009; (b) to include the anticipated net proceeds, due to be received on or around 3 September 2009, in their calculation of the leverage covenant at 31 August 2009; (c) that the remaining balance of £3 million outstanding under the converted 364 day credit facility will be due for repayment in January 2011; and (d) to amend the existing financial covenants over Cosalt's Debt Facilities.
In the event that the Placing and Open Offer and Firm Placing do not proceed, HSBC and RBS will not defer the date of the next quarterly test of the leverage covenant nor amend the quarterly covenant tests or convert the 364 day credit facility into a term loan and amend the terms of its repayment. As disclosed in the lnterim Report, the Directors believe that, without the proceeds from the Placing and Open Offer and Firm Placing, there is a material risk that Cosalt would be in breach of the leverage covenant in its Debt Facilities at 31 July 2009. As further reported in the Interim Report in such circumstances, there would be a material uncertainty casting significant doubt upon Cosalt's ability to continue as a going concern. The Directors firmly believe, therefore, that the Placing and Open Offer and Firm Placing is the most preferable course of action available to the Company.
Without the proceeds from the Placing and Open Offer and Firm Placing, in the likely event of a breach of the leverage covenant, the Debt Facilities would become repayable on demand and HSBC and RBS would have the right to take immediate action. It is probable that Cosalt would immediately be forced to renegotiate its banking facilities with HSBC and RBS. Whilst the Directors are confident that the Debt Facilities could be renegotiated, they cannot be certain of a successful outcome. They are also of the opinion that this would be a difficult, costly and time-consuming process, distracting for the business and likely to result in the imposition of significantly more onerous terms under the Debt Facilities than currently exist. The Directors firmly believe that this would not be in the best interests of the Company or Shareholders.
In the event that the Debt Facilities cannot be renegotiated, the Directors would be forced to pursue alternative courses of action that they would not otherwise choose to take, such as pursuing the indicative proposals from third parties potentially interested in making offers for the entire issued share capital of Cosalt, investigating the possible sale of some of the Company's assets or taking on other external more costly forms of finance, such as mezzanine funding, on terms that are likely to be significantly more onerous. Whilst such actions represent realistic alternatives, no discussions of this nature have as yet taken place and the Directors cannot be certain as to whether the outcome of any such actions would be successful. Without such actions, HSBC and RBS might choose to enforce the guarantees and security in place over the Group, in which case the Company would enter into administration or insolvency proceedings would be commenced against the Company.
Without Shareholder approval of the Resolutions to approve the Placing and Open Offer and Firm Placing at the General Meeting, the Board cannot confirm that the Company will have sufficient working capital for its present requirements, that is for at least 12 months from the date of this document. Accordingly, it is very important that Shareholders vote in favour of the Resolutions in order that the Placing and Open Offer and Firm Placing can proceed.
11. Board Changes
Following the General Meeting, David Hobdey and John Kelly will step down from the Board. It is intended that, following the General Meeting, Calum Melville and Simon Gilbert will be appointed to the Board as Executive Director and Non-executive Director respectively and David Ross, currently a Non-executive Director of the Company, will be appointed as its Chairman. Cosalt also intends to appoint a new independent non-executive director with relevant industry expertise in due course.
12. General Meeting
The Company is required to obtain certain Shareholder approvals in connection with the Placing and Open Offerand Firm Placing, the Capital Reorganisation and the Related Party Transactions and a General Meeting is therefore to be held at 10 a.m. on 1 September2009 at which the recommended Resolutions containing such approvals will be sought.
The Board, having received financial advice from Evolution and Noble Grossart, considers the Placing and Open Offerand Firm Placing, the Capital Reorganisation and the Related Party Transactions to be in the best interests of the Company and its Shareholders as a whole. In giving their financial advice, Evolution and Noble Grossart have taken into account the Directors' commercial assessment of the Placing and Open Offer and Firm Placing, the Capital Reorganisation and the Related Party Transactions. The Board, so advised by Evolution and Noble Grossart, believes that the issue of 28,000,000 New Ordinary Shares to Sovereign Holding, 22,200,000 New Ordinary Shares to David Ross, 10,000,000 New Ordinary Shares to Hanover Investors, 5,000,000 New Ordinary Shares to Stuart Melville, 4,200,000 New Ordinary Shares to Mark Lejman and 400,000 New Ordinary Shares to Mike Reynolds pursuant to the Firm Placing is fair and reasonable as far as Shareholders are concerned. Yarom Ophir, who is a director of Cosalt and a director of Sovereign Holding, has not taken part in the Board's consideration of the Sovereign Related Party Transaction. None of David Ross, Mark Lejman or Mike Reynolds have taken part in the Board's consideration of each of their own related party transactions.
Accordingly, the Board recommends that Shareholders vote in favour of the Resolutions to be put to the General Meeting as they intend to do, or procure to be done, in respect of their own beneficial holdings, amounting to 4,056,569 Ordinary Shares, representing approximately 15.36 per cent. of the Existing Ordinary Shares.
13. Timetable
Each of the times and dates in the table below is indicative only and may be subject to change.
| Ordinary Share Record Date for entitlement under the Open Offer Close of business on | 4 August 2009 |
| Announcement of the Placing and Open Offer and Firm Placing and publication of Prospectus and Application Form | 6 August 2009 |
| Ex-entitlement date for the Open Offer | 8.00a.m. on 6 August 2009 |
| Open Offer Entitlements credited to stock account of Qualifying CREST Shareholders in CREST by | 7 August 2009 |
| Recommended latest time for requesting withdrawal of Open Offer Entitlements from CREST | 4.30p.m. on 21 August 2009 |
| Latest time and date for splitting Application Forms (to satisfy bona fide market claims only) | 3.00p.m. on 24 August 2009 |
| Latest time and date for depositing Open Offer Entitlements into CREST | 3.00 p.m. on 25 August 2009 |
| Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer and settlement of relevant CREST instructions (as appropriate) | 11.00a.m. on 26 August 2009 |
| Latest time and date for receipt of Forms of Proxy for use at the General Meeting | 9.30a.m. on 30 August 2009 |
| General Meeting | 10.00a.m. on1 September 2009 |
| Admission and commencement of dealings in the New Ordinary Shares | 08.00a.m. on 2 September 2009 |
| New Ordinary Shares in uncertificated form expected to be credited to accounts in CREST | 08.00a.m. on 2 September 2009 |
| Despatch of definitive share certificates for the New Ordinary Shares in certificated form by | 7 September 2009 |
Definitions
The following definitions apply throughout this announcement, unless the context otherwise requires.
| Admission | admission of the New Ordinary Shares to (i) the Official List and (ii) trading on the London Stock Exchange's main market for listed securities becoming effective in accordance with, respectively, LR 3.2.7G the Listing Rules and paragraph 2.1 of the Admission and Disclosure Standards; |
| Board or Directors | means the board of directors of the Company; |
| Bridon | Bridon International Limited |
| Capital Reorganisation | the proposed reorganisation of the Ordinary Shares into Redenominated Shares and Deferred Shares, as more particularly described in the Prospectus |
| City Code | the Takeover code |
| Cosalt or Company | Cosalt plc, a company incorporated in England and Wales (Company Number 19628) and having its registered office at Fish Dock Road, Grimsby, North Lincolnshire DN31 3NW; |
| Debt Facilities | the credit and loan facilities made available to the Company as described in paragraph 13.5 of Part VIII of the Prospectus |
| Deferred Shares | the non-voting deferred shares of 24 pence each in the capital of the Company to be created as a result of the Capital Reorganisation, and "Deferred Share" means one of them |
| Evolution | Evolution Securities Limited, a company incorporated in England and Wales (Company Number 2316630) and having its Registered Office at 100 Wood Street, London EC2V 7AN; |
| Firm Places Shares | the 198,000,000 Redenominated Shares which the Company is proposing to issue in the Firm Placing |
| Firm Placees | any persons who have agreed or shall agree to subscribe for Firm Placed Shares pursuant to the Firm Placing |
| Firm Placing | the subscription by the Firm Placees for the Firm Placed Shares |
| General Meeting | the extraordinary general meeting of the Company to be held at 10:00 a.m. on 1 September 2009; |
| HSBC | HSBC Bank plc |
| London Stock Exchange | the London Stock Exchange plc; |
| New Ordinary Shares | the Redenominated Shares of one pence each to be issued pursuant to the Placing and Open Offer and Firm Placing |
| Noble Grossart | Noble Grossart Limited; a company incorporated in Scotland (Company Number SC046265) and having its Registered Office at 48 Queen Street, Edinburgh, EH2 3NR |
| Ordinary Shares | the issued and to be issued ordinary shares of one pence each in the capital of the Company; |
| Open Offer | the offer to Qualifying Shareholders, constituting an invitation to apply for the Open Offer Shares on the terms and subject to the conditions set out in this document and, in the case of Qualifying Non-CREST Shareholders, in the Application Form; |
| Open Offer Entitlement | an entitlement to apply for Open Offer Shares allocated to a Qualifying Shareholder pursuant to the Open Offer |
| Open Offer Shares | the 180,000,000 Ordinary Shares to be offered to Qualifying Shareholders under the Open Offer; |
| Placing | the conditional underwritten placing of the Placing Shares by Evolution on behalf of the Company; |
| Placing Price | 5p per Placing Share; |
| Placing Shares | 198,000,000 Ordinary Shares to be placed pursuant to the Placing; |
| RBS | The Royal Bank of Scotland plc |
| Redenominated Shares | the new Ordinary Shares of one pence each in the capital of the Company following sub-division of the Ordinary Shares as a result of the Capital Reorganisation and "Redenominated Share" means one of them |
| Related Party Transactions | the issue of 22,200,000 New Ordinary Shares to David Ross, 10,000,000 New Ordinary Shares to Hanover Investors, 5,000,000 New Ordinary Shares to Stuart Melville, 4,200,000 New Ordinary Shares to Mark Lejman and 400,000 New Ordinary Shares to Mike Reynolds pursuant to the Firm Placing, as described in paragraph 14 of Part VIII of the Prospectus, together with the Sovereign Related Party Transaction |
| Shareholders | holders of Ordinary Shares; and |
| Sovereign Related Party Transaction | the issue of 28,000,000 New Ordinary Shares to Sovereign Holding Limited pursuant to the Firm Placing, as described in detail in paragraph 14 of Part VIII of this document |
| UK | the United Kingdom of Great Britain and Northern Ireland, its territories and possessions, and all areas subject to its jurisdiction; |
| US Securities Act | The United States Securities Act 1933, as amended |