Marine firm investors attack David Ross
Founder of Carphone Warehouse accused of abusing his position at 141-year-old business
Sunday 02 December 2012
David Ross, the colourful multimillionaire founder of Carphone Warehouse, is at the centre of a row over his 141-year-old family business, the marine supply company Cosalt.
Minority shareholders, acting together through various online investor chatrooms, have accused him of attempting to take over the London listed business on the cheap.
They have written, as individuals, to the Takeover Panel and the Financial Services Authority, accusing Mr Ross of "abusing his position with a view to personally taking the company private at a ridiculously low price".
Mr Ross responded this weekend. He said: "I have spent a year of my life trying to sort out a situation which I always said I would make no money out of."
He pointed out that Cosalt is now a company whose value is half that of its pension fund liabilities, and that when he made a takeover bid for it last year, he declared the shares had no value.
He said: "I wanted to safeguard the jobs at Cosalt. Keep the company going and save the heritage of the business."
Cosalt was created as a co-operative by fishing vessel owners in Grimsby in 1873 as the The Great Grimsby Coal, Salt and Tanning Company. It provided the salt for preserving fish, the coal for power, and the tanning for sails and ropes to much of the North-east fishing port, extending to other ports around the UK.
The business was bought out by one of the original fishing vessel owners, Carl Ross, grandfather of David and owner of the Ross frozen foods brand. The company floated on the stock market in 1971. With the decline of Britain's fishing industry, Cosalt – after a brief and somewhat unsuccessful diversion into building caravans – has become a serious supplier of marine and safety equipment, largely to the offshore oil and gas industry.
David Ross joined the company in 2007, taking over from his father as chairman. He was forced to stand aside for a year as chairman between December 2008 and December 2009 after revelations that he had pledged shares in Carphone Warehouse against loans for his private property empire without disclosing the fact, which appeared to breach UK listing rules.
In October 2011, the company issued a profits warning, and the following month announced that Mr Ross was considering a takeover bid and had secured some of its loans.
The bid came at just 0.1p a share, valuing Cosalt at £14.4m, and was later doubled to 0.2p a share. This ended up with Mr Ross increasing his stake from 43 per cent to 56 per cent but unable to push through a full takeover.
Mr Ross's bidding vehicle, Oval, lent cash to Cosalt, which at the last count amounted to £6m.
In the meantime, two former employees were taken to court over alleged fraud, and settled out of court for a payment of £2m. The company reported the matter to the police, but only, according to aggrieved shareholders, after the court case had been settled. Under Scottish law, the company said, it was important to seek redress before any criminal proceedings took precedent.
Last week Cosalt issued a trading statement stating that it was "in continuing discussions with David Ross, the group's pension trustees and its banks to secure a long-term financing solution".
A spokesman told The Independent on Sunday: "The accounts cannot be signed off because no agreement has been reached with either the company's banks or the pension fund trustees. They want to reach a solution but it is not easy."
Shares in Cosalt were suspended at 0.83p on the London stock market on 1 May when it announced it was unable to publish the report and accounts for 2011 within the four months required under UK listing rules.
Both the Takeover Panel and FSA declined to confirm they were investigating either Cosalt or Mr Ross.
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