Snorkel Investment & Legal Proceeding Update

RNS Number : 2714D

Tanfield Group PLC

18 October 2022

 

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Tanfield Group Plc

("Tanfield" or the "Company")

Snorkel Investment & Legal Proceeding Update

The Board of Tanfield (the "Board") is pleased to update the market regarding the Company's ongoing legal proceedings in relation to its investment in Snorkel International Holdings LLC ("Snorkel"), the aerial work platform business.

Investment Background

· Tanfield is a 49% shareholder in the equity of Snorkel following the joint venture between the Company and Xtreme Manufacturing LLC ("Xtreme") (the "Contemplated Transaction"), a company owned by Don Ahern of Ahern Rentals Inc, relating to Snorkel, in October 2013.

· The Snorkel investment is valued at £19.1m.  The outcome of the US and UK Proceedings referenced below could have an impact on this valuation.

· On 22 October 2019, the Company announced that it had received a Summons and Complaint, filed in Nevada (the "US Proceedings") by subsidiaries of Xtreme, relating to the Contemplated Transaction.

· On 24 October 2019, the Company announced it had become necessary to issue and serve a claim in the English High Court against Ward Hadaway (the "UK Proceedings"), the solicitor acting for the Company at the time of the Contemplated Transaction, in order to fully protect the Company's rights. 

· On 26 February 2021, Ward Hadaway was granted permission to join Foulston Siefkin, Tanfield's US based law firm who were retained in 2013 to draft the documents governed by US law relating to the Contemplated Transaction, into the UK Proceedings.  As a result, the Company amended its claim to include Foulston Siefkin as a second defendant.

· On 14 October 2022, the Company announced that it had agreed to settle its claim against Foulston Siefkin in relation to the UK Proceedings on a no-fault basis for the sum of $4.5m (£4.0m).

Highlights

· The Company has agreed to settle its claim against Ward Hadaway in relation to the UK Proceedings on a no-fault basis for the sum of £2.9m including interest and costs.

· This brings an end to the UK Proceedings and, once the agreed Court Order is approved, the 3-week trial scheduled to begin on 7 November 2022 will be vacated. 

· The Company will now focus entirely on the US Proceedings, which are continuing and the jury trial is currently expected to take place around the summer of 2023. 

Business Update

Tanfield is a 49% shareholder in the equity of Snorkel following the joint venture between the Company and Xtreme, a company owned by Don Ahern of Ahern Rentals Inc, relating to Snorkel, in October 2013 .

Non-Fault Settlement

Following the announcement on 14 October 2022, in which the Company announced that it had agreed to settle its claim against Foulston Siefkin in relation to the UK Proceedings on a no-fault basis for the sum of $4.5m (£4.0m), the Board is pleased to announce that the Company has now also reached an agreement to settle its claim against Ward Hadaway, the solicitor acting for the Company at the time of the Contemplated Transaction, on a no-fault basis for the sum of £2.9m including interest and costs.  For the avoidance of doubt, the agreed settlement should not be construed as an admission of liability or wrongdoing by Ward Hadaway.  Save as required under the AIM Rules for Companies, to which the Company remains subject, the terms of the settlement remain confidential between the parties.

UK & US Legal Proceedings

As a result of reaching no-fault settlements with both parties in relation to the UK Proceedings, amounting to £6.9m collectively, the 3-week trial scheduled to begin on 7 November 2022 will now be vacated, bringing an end to the UK Proceedings . 

As reported in the Company's 2021 Report and Financial Statements, £1.25m of cash is held on deposit with the English Court as security in relation to the UK Proceedings.  As a result of reaching no-fault settlements with both parties, bringing an end to the UK Proceedings, the £1.25m of security will also be released and returned to the Company.

As updated on 14 October 2022, the US Proceedings are continuing and the Company will now focus entirely on those proceedings.  Whilst there are ongoing deficiencies in the production of documents by Snorkel / Xtreme, the jury trial is currently still expected to take place around the summer of 2023.

The Board continues to believe that a positive outcome to the US Proceedings is possible.  So far as it is necessary, the Company will continue to vigorously defend its position, whilst continuing to seek advice.

Use of Funds

As updated on 14 October 2022, following the no-fault settlement with Foulston Siefkin, any excess funds would be used to repay a proportion of the Company's loan note instruments.  As a consequence of the further above settlement with Ward Hadaway, the Company will now, as required by the loan agreements, seek to fully repay its £2.825m of loans, plus accrued interest and early redemption premiums.  The remaining funds will be used to provide ongoing working capital funding, including costs related to the US Proceedings.

The Board believes that it has the necessary funding to ensure that the Company can continue to protect its investment in Snorkel. 

Further updates will be provided to Shareholders as and when appropriate.

For further information:

Tanfield Group Plc   020 7220 1666

Daryn Robinson 

WH Ireland Limited - Nominated Advisor / Broker

James Joyce / Megan Liddell      020 7220 1666

 

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