20th May 2014 13:28
LONDON (Alliance News) - Tanfield Group PLC Tuesday said it had signed a deal with Smith Electric Vehicles US which conditionally binds it to sign consents to allow Smith to raise funding up to USD30 million and to restructure the capital of the company.
The news comes after Tanfield last week said that Smith, one of the two companies it is invested in, had 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.
At that time, Tanfield had said it thought there was 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.
In its statement Tuesday, Tanfield said the Smith Board plans to convert all debt into common stock prior to listing on the over-the-counter bulletin board and simultaneously raise up to USD30 million. It is then proposed that Smith seeks a full listing on a US national exchange.
"The Tanfield Board has evaluated the balance of risk and reward associated with the Smith restructuring plan. On balance it remains positive that supporting this plan represents the best possible outcome for all stakeholders of Smith, including Tanfield," the company said in a statement.
"The Tanfield Board considers that in entering this agreement it has sought to fulfil its obligation to its shareholders in seeking to optimise the value on its investment in Smith," it added.
It said it estimates that after the Smith merger and listing on the over-the-counter bulletin board, Tanfield will hold between 4% and 5% of Smith shares, excluding warrants. The ultimate holding post the public listing on a US National exchange will depend on price at which any money is raised at that point, it said.
It expects that it will hold Smith warrants representing just under 2% of its share capital when it lists on the bulletin board.
Tanfield shares were down 1.4% at 16.02 pence Tuesday.
By Steve McGrath; [email protected]; @stevemcgrath1
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