Shares of Cosalt, the marine safety group in which Carphone Warehouse co-founder David Ross is a major shareholder, fell sharply this morning on news of a half-year loss and a warning that the firm may breach its banking covenants.

The Grimsby-based company, which was bought by Mr Ross’s grandfather nearly 60 years ago, reported a £3.4 million half year pre-tax loss compared with profits of £777,000 in the same period last year.

This was despite a 6.6 per cent rise in sales during the period — to £52.85 million — and was due mainly to some £3.9 million worth of one-off costs, including some redundancies, along with write downs which included impairments on former holiday home properties which Cosalt is trying to sell.

Cosalt, which makes Crewsaver life jackets and sells safety systems to ships and the oil and gas industry, said it would not be paying an interim dividend in order to conserve cash.

Shares of the company, in which Mr Ross holds a 15.1 per cent stake, tumbled 14 per cent on the news.

David Hobdey, chairman of Cosalt, said the firm’s current banking facilities were insufficient for its working capital needs and that, in the short term, there was a “material risk” that it could breach its covenant at its next test date on July 31.

He added: “The Board, therefore, has concluded that it is in the best interests of the group and the company’s shareholders to raise additional equity funds and it is expected that this will be achieved through a placing and open offer and firm placing. HSBC and RBS, the group’s principal bankers, remain fully supportive of the group and are in final discussions about a number of amendments, conditional on the completion of a planned fundraising, to the banking terms which would provide an increased level of headroom.”

He said preparations for the planned fund raising were “well advanced” and said the move would provide Cosalt with a more stable financial base from which to grow the business.

Mark Lejman, chief executive, said Cosalt was enjoying strong demand for its Crewsaver life jackets. He said this included a £240,000 order for lifejackets for the largest cruise liner ever built, Oasis of the Seas, which is due to enter service later this year. He said the firm had also seen large orders in the period for its protective workwear from UK fire brigades, Network Rail and West Midlands Police.

Cosalt dates back to 1873 when ship owners from the port of Grimsby established The Great Grimsby Coal, Salt and Tanning Company — a co-operative which provided products allowing fishermen to carry out their work efficiently and safely.

Mr Ross’s family has enjoyed strong links with Cosalt for many years. His grandfather was chairman when the company floated on the stock market in 1971 — the year it shortened its name to Cosalt — and his father was chief executive until he resigned after poor results in November 1986.

Mr Ross snapped up a 12.6 per cent stake and joined the board as a non-executive director in April 2005 and raised his stake in April 2007.

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