11th Jul 2014 08:33
LONDON (Alliance News) - Tanfield Group PLC Friday said Smith Electric Vehicles US, one of its investments, has bought an 85.3% stake in American Business Services Inc for USD340,000, the first step in the process of Smith becoming a publicly listed company on the Over The Counter Bulletin Board in the US.
In late May, Tanfield decided to support Smith Electric Vehicles' capital restructuring and listing plans, even though the deal will dilute its shareholding in Smith. It signed a deal which conditionally bound it to sign consents to allow Smith to raise up to USD30 million in funding and to restructure its capital.
Smith, one of two companies that Tanfield is invested in, had reached a deal which would see battery technology company Sinopoly Battery Ltd make a strategic investment in the firm, and also signed a letter of intent that would see it list on the OTC bulletin board by taking control of a company already listed on it.
The Smith board plans to convert all debt into common stock prior to listing on the OTC bulletin board and simultaneously raise up to USD30 million.
Tanfield had estimated that after the Smith merger and listing on the OTC bulletin board, Tanfield would hold between 4% and 5% of Smith shares, excluding warrants, down from the 24% it currently has.
Tanfield was a manufacturing entity until it ran into trouble in the recession, and now has two passive investments. It disposed of most of Smith Electric Vehicles in 2009, followed by the majority stake in the Snorkel division in October 2013, though it currently owns 24% of Smith and 49% of Snorkel. Tanfield's current goal for the two passive investments is to hold on to them until they can return as much value as possible to shareholders. Tanfield values its stake in Snorkel at GBP36.28 million, while Smith, which is likely to seek a full listing on a US national exchange, has a GBP1.28 million carrying value.
Tanfield has said it would raise money to acquire and fund any new investments, ring-fencing the current investments.
Tanfield shares were up 4.4% at 17.75 pence Thursday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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