Loan Note Instrument and Snorkel Investment Update

RNS Number : 9561H

Tanfield Group PLC

30 March 2020

 

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain

Tanfield Group Plc

("Tanfield" or the "Company")

Loan Note Instrument and Snorkel Investment Update

The Board of Tanfield (the "Board") is pleased to announce that the Company has put in place a loan note instrument (the "Loan") of up to £700,000.  The Loan will be used to provide funding for the ongoing legal proceedings relating to its interest in Snorkel International Holdings LLC ("Snorkel") and other day to day costs. 

The Loan is unsecured, carries annual interest of 10% which is to accrue and is repayable on the earlier of (i) 28 February 2025 or (ii) receipt of sufficient funds relating to either the legal proceedings brought against the Company by its 51% joint venture partner SKL Holdings LLC ("SKL") and Snorkel (the "US Proceedings") or the proceedings against Ward Hadaway as reported on 24 October 2019 (the "UK Proceedings").

Several existing shareholders have subscribed to the Loan and have collectively committed to provide a minimum of £500,000.  The Loan constitutes a related party transaction under Rule 13 of the AIM Rules as a result of OTK Holding A/S and Zoar Invest Aps, which each hold approximately 14% of the issued shares of the Company, both subscribing £180,000 to the Loan.  The Directors of the Company, having consulted with WH Ireland Limited, the Company's nominated adviser, consider the terms of the transaction to be fair and reasonable.

Snorkel Investment Update

The Board is updating the market regarding the US Proceedings and the UK Proceedings.

As reported on 22 October 2019, Snorkel and SKL filed a Summons and Complaint in the District Court, Clark County, Nevada where they allege that, pursuant to their issuing a call option, they can acquire Tanfield's 49% interest in Snorkel for $0 (nil) and that payment of the priority amount and preferred return (collectively the "Preferred Interest"), which on 30 September 2018 amounted to approximately $25m, is not required.  The Board disagrees with this position and is continuing to take advice and the necessary steps to vigorously defend its position including answering the Complaint and asserting counterclaims against Snorkel and SKL. 

Despite ongoing attempts to resolve the dispute amicably, and before the parties had any opportunity to conduct discovery, on 29 January 2020, Snorkel and SKL filed a Motion for Summary Judgment (the "Motion") in favour of their claims and against claims brought by Tanfield, without a trial, claiming that there were no genuine issues of material fact. 

The Board vehemently disagree with the Motion and are of the opinion that it is without merit and subsequently opposed the Motion at a hearing held on 25 March 2020.  The Board notes that it is Snorkel and SKL that are trying to take Tanfield's 49% interest for $0 (nil) consideration, despite Tanfield having contributed the substantial assets and value of its aerial work platform division to Snorkel in 2013. This was done in good faith based on the terms of the contemplated transaction as described in the Circular, issued in accordance with AIM Rules, which was a requirement of the agreement that was subsequently entered into following the necessary shareholder approval.  Following the hearing on 25 March 2020, the judge took the Motion under advisement and we await a ruling to be issued.

On 12 October 2019, we reported that it had not been possible to agree amicably a stay of the UK Proceedings ("Stay") with Ward Hadaway and, if that situation persisted, it was the intention of the Board to apply to the court for a Stay.  To date, it has still not been possible to agree an amicable Stay with Ward Hadaway and therefore the Company has filed an application for a Stay, pending the outcome of the US Proceedings, with the court.  It is expected that the outcome of the application for a Stay will be known by the end of May, subject to any delay due to COVID-19.

The Board will provide further updates 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 / Lydia Zychowska                                                    020 7220 1666

 

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