COZART plc

My "very good reason" is a source I'm not prepared to divulge but consider these notions:

1. The management of Cozart was a willing buyer of Spinreact. Nothing forced them into the deal.

2. Would the directors, including the non-execs - who represent we shareholders, have been rash enough to complete a discretionary deal that would have brought the company to the brink of illiquidity; a deal that might threaten the value of the very large stakes that the exec and non-exec directors hold in Cozart?

3. Spinreact is/was profitable to a degree sufficient, along with a minor, new, contribution from the Scandinavian acquisition, to move the conjoined companies into profit. In 2004, Spinmedia made about twice as much in profit profit as Cozart lost in the year to May 31st. 2005.

4. Would the Bank of Scotland have said, in effect, "You want to borrow £3m from us to fund a deal that will leave you almost completely devoid of cash resources and seriously threaten your ability to repay your debts to us. Well that sounds fine to us. Here's the £3m. Nice to do business with you."

5. Finally, and maybe crucially, Spinreact came with an audited net asset position of £4.6m. How much of that was cash? I don't know and I suspect that neither do you.

For Cozart now to have to have an emergency funding at a level that would greatly dilute the value of the management's current holdings in the company, the following would have had to have happened:

The directors would have had to have persuaded a perfectly competent and conservative bank to make a loan to add to the company's last cash reserves to produce a cash sum large enough to buy a Spanish pig in a poke.

Now, these things are possible. After all, Unwin's has just gone bust only a few months after it was bought by a supposedly smart bunch of private equity investors. Has Cozart shot itself in the foot?

Soon we'll find out.