Tanfield Group PLC, parent of Snorkel, has signed a contract to dispose of the business and assets of the company's wholly owned division, Smith Electric Vehicles, to a U.S. associate company, Smith Electric Vehicles US (SEVUS), for $15 million. Funds obtained during the transaction will be used by Tanfield for its Powered Access division, which includes Snorkel, as it continues its strategy to prepare this business for the anticipated market recovery. The transfer of ownership will be effective Jan. 1, 2011.
According to Darren Kell, CEO of the Tanfield Group, the board of Tanfield believes that consolidating Smith Electric Vehicles into SEVUS creates a single, larger U.S.-based business, which would be in the best interests of shareholders. The structure of the transaction will give the consolidated business the best chance of achieving its short-and long-term strategic objectives.
Tanfield will receive $15 million over the next 20 months, with the first payment expected to be made upon completion of the transaction. Interest will accrue on the principal outstanding amount at the rate of 4 percent over base rate. In the event that SEVUS completes further interim fundraises, then Tanfield has the option to receive lump sum payments to reduce the consideration and create a payment holiday for SEVUS. In the event of an IPO of SEVUS, the full balance of the consideration would immediately fall due.
Following the transaction, Tanfield will retain a 49 percent holding in SEVUS business. Plans for SEVUS include a possible public offering of its equity securities on the NASDAQ exchange.
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