(Alliance News) - Tanfield Group PLC said Friday its legal case in the US will progress to the discovery stage but scored a victory after a court denied a motion made against the firm.
Shares in the company were 36% higher in London on Friday afternoon at 2.38 pence each.
The legal battle relates to its interest in Snorkel International Holdings LLC.
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.
At the end of January, 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 disagreed" with the motion, and believed it was "without merit" and subsequently opposed the motion at a hearing held last Wednesday.
In a statement Friday, Tanfield said: "On April 1, after a review and consideration of the record, the court determined that, after reviewing the contract there appears to be genuine issues of material fact pertaining to the contract, its terms, and its execution and therefore denied the Motion brought by Snorkel and SKL. As a result of the Motion being denied, the US Proceedings will continue to progress, and the parties will now proceed in discovery."
The company secured a GBP700,000 loan instrument from its shareholders to help its legal battle.
"Following the loan, the board continue to seek advice in order to vigorously defend its position and will provide further updates to the market as and when appropriate," Tanfield added Friday.
By Paul McGowan; paulmcgowan@alliancenews.com
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Tanfield (TAN)