Investor Tanfield Group has raised more funding to support its legal battle to protect its stake in Washington-based cherry picker firm Snorkel.
Another £300,000 has been provided by investors and will be used in in º£½ÇÊÓƵ and US proceedings against US-based Xtreme Manufacturing LLC, which claims it has the right to acquire Tanfield's £19.1m stake in Snorkel for free. Tanfield also signalled it may require yet more funding to fuel the challenge and has sounded out investors.
At the same time, shareholders of Tanfield were told that its board was investigating why there had been continued reductions in the gross profit margin at Snorkel, which reported an Ebitda loss of about £3.6m ($4.3m) in the quarter, compared to a profit of £169,378 in the same period of 2021. Sales at the aerial lift specialist had recovered to roughly £39.6m ($46.8m) - a 16.3% increase on the second quarter of 2021. However, despite the revenue uplift the gross profit margin reduced further to 2.8% for the period, compared to 8.9% for the second quarter of 2021.
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The dispute surrounding Tanfield's 49% stake on Snorkel involves a staged acquisition deal in 2013, in which Tanfield sold 51% of the company to Xtreme Manufacturing LLC, in order to save it. Before trials in the º£½ÇÊÓƵ this November and in the US next summer, expert accountancy evidence will be prepared to value Snorkel at the time of the proposed deal which included performance-related terms that would allow Tanfield to sell its remaining shares to Xtreme.
However, Xtreme claims these targets were not hit and that it now has the right to acquire Tanfield’s 49% stake in Snorkel for free. In October 2019 Tanfield received a summons and complaint, filed in Nevada, from Xtreme.
In its latest update to the London Stock Exchange, Tanfield reaffirmed its commitment to protecting its stake in Snorkel. A note to investors read: "The board continues to believe that a positive outcome to either or both proceedings is possible.
"So far as it is necessary, the company will continue to vigorously defend and advance its position in both proceedings, whilst continuing to seek advice."
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