12th May 2014 09:50
LONDON (Alliance News) - Tanfield Group PLC Monday said that Smith Electric Vehicles, one of the two companies it is invested in, has reached a deal which would see battery technology company Sinopoly Battery Ltd make a strategic investment in the firm, and has also signed a letter of intent with an over-the-counter bulletin board company that would see Smith Electric acquired and then listed in the US.
However, Tanfield said it thinks there is a "very high level of risk" that the planned listing isn't successful. Smith Electric Vehicles would need to restructure its capital as part of the process, a move that would need the approval of a number of significant investors, which may not be forthcoming, Tanfield said.
"As indicated in Tanfield's investment update of 14 March 2014 there will be a marked dilution to the ultimate holding by Tanfield in its Smith investment and therefore in the ultimate value to Tanfield shareholders. Should the proposals conclude Tanfield expects the OTCBB merger to take approximately 3 months and the subsequent move to NYSE or NASDAQ to take approximately a further 3 months," it said in a statement.
In March, Tanfield had said that Smith Electric Vehicles had told it that its survival was dependent on the continued support of its investors, and it was in talks about raising fresh funds.
In its statement Monday, Tanfield said the investment from Sinopoly would come in three tranches: a first USD2 million investment in its secured debentures; a second USD10 million investment in preferred stock as part of a USD20 million to USD30 million stock issue by Smith subject to a battery supply contract and a component supply memorandum of understanding between the companies; and a third investment of USD30 million through a share subscription subject to Smith being listed on a US exchange.
"It is the intention of the board of Tanfield to distribute the value in its investments as soon as that value is realised," the company said.
Tanfield Group shares were down 2.2% at 16.50 pence Monday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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