(Alliance News) - Tanfield Group PLC said Monday it shareholders have put in place a GBP700,000 loan instrument to help in its legal battle relating to its interest in Snorkel International Holdings LLC.
The loan is unsecured, carries annual interest of 10% which is to accrue and is repayable on the earlier of February 2025 or receipt of sufficient funds relating to either the legal proceedings brought against the company.
The company has a 49% membership interest in Snorkel International and a 5.76% interest in the shares of Smith Electric Vehicles Corp.
Heavy equipment maker Xtreme Manufacturing LLC holds the remaining stake in the Snorkel joint-venture.
In October, Tanfield said both Snorkel and SKL Holdings LLC, an Xtreme subsidiary, filed a summons and complaint against Tanfield in a US court.
The complaint is in relation to SKL exercising a call option in November 2018, to acquire Tanfield's share in the joint-venture. Tanfield took aim at "the validity of the purported call option notice"and claimed to have attempted "to resolve the dispute amicably".
SKL and Snorkel, according to Tanfield, alleged that Tanfield "refused to comply with its contractual obligations in relation to the purported call option correspondence".
Tanfield's Snorkel investment is valued at GBP19.1 million, though the firm noted that the outcome of the US litigation could impact the investment value.
On Monday, Tanfield said: "Despite ongoing attempts to resolve the dispute amicably, and before the parties had any opportunity to conduct discovery, on January 29, Snorkel and SKL filed a Motion for Summary Judgment in favour of their claims and against claims brought by Tanfield, without a trial, claiming that there were no genuine issues of material fact."
Tanfield said it "vehemently disagrees" with the motion, and believes it is "without merit" and subsequently opposed the motion at a hearing held last Wednesday.
"The board notes that it is Snorkel and SKL that are trying to take Tanfield's 49% interest for USD0 consideration, despite Tanfield having contributed the substantial assets and value of its aerial work platform division to Snorkel in 2013," Tanfield added.
The company continued: "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 March 25, the judge took the motion under advisement and we await a ruling to be issued."
Shares in Tanfield Group were untraded in London on Monday but last closed at 2.10 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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Tanfield (TAN)