Safety gear maker Cosalt to appoint administrators

Fri Feb 15, 2013 8:27am EST

Feb 15 (Reuters) - Safety equipment maker Cosalt Plc , which warned last week it faced insolvency, said its bankers would appoint administrators to run the company after failing to reach an agreement on its debts and funding for its pension scheme.

The company said it had failed to find an alternative source of funding demanded by two lenders - HSBC Bank and RBS - who had threatened to enforce security on loans.

The lenders fear the company does not have enough money to sustain its operations while it seeks shareholder approval to sell its two main businesses, Cosalt Offshore and Cosalt Workwear.

Cosalt, whose products include life rafts and fire-fighting equipment, ended 2012 with 17 million pounds ($26 million) of debt and has been kept afloat thanks to loans from its chairman, David Ross, the co-founder of Europe's biggest independent mobile phone retailer Carphone Warehouse Group.

Cosalt has also been weighed down by the amount it owes its pension scheme, which had a deficit of about 9 million pounds at the end of 2010, a figure the company said had since grown.

The administrators will seek to sell Cosalt Offshore and Cosalt Workwear and no employees, customers or suppliers are expected to be materially affected, Cosalt said in a statement.

An agreement to sell Cosalt Offshore has already been negotiated, it added.