Tanfield Regulatory News (TAN)

28 Jun 2007 07:04

Tanfield Group PLC28 June 2007 28 June 2007 THE TANFIELD GROUP PLC ("Tanfield" or the "Company") Proposed acquisition of Snorkel Holdings LLC and Proposed placing to raise £115 million The Tanfield Group Plc, the leading manufacturer of zero emission electricvehicles and aerial work platforms, is pleased to announce the proposedacquisition (the 'Acquisition') of the entire issued share capital of SnorkelHoldings LLC ('Snorkel') and a conditional placing to raise £115 million (beforeexpenses) (the "Placing"). Snorkel is a worldwide supplier of high quality industrial aerial workplatforms. The products have a wide range of working at height applications andare supported by service, parts and training teams. Snorkel has significantmanufacturing capabilities along with strong sales and distribution, in the USAand Australasia. HIGHLIGHTS • Conditional agreement to acquire the entire share capital of Snorkel forUS$100m (£50m) and assume approximately US$25.0 million (£12.5 million) ofdebt. The Acquisition is to be satisfied as to US$95.0 million in cash,which is to be funded from the Placing. In addition, the Acquisition is tobe satisfied as to US$5.0 million by granting to the sellers of Snorkel (the"Sellers") the right to receive 1,535,662 ordinary shares of £0.01 each inthe Company (the "Consideration Shares") on the first or second anniversaryof completion of the Acquisition • The Placing will raise £115 million (before expenses) for the Company • Net proceeds of the Placing to fund the cash portion of theconsideration for the Acquisition as well as to provide Snorkel with additionalworking capital which the Directors expect will expedite growth and improvemargins through more efficient purchasing. In addition, the placing proceedswill be used to pay down approximately $25million (£12.5 million) of debt in theSnorkel Group and will leave the Enlarged Group debt free • A portion of the Placing proceeds will also provide additional workingcapital to establish Smith Electric Vehicles in the USA, capitalising on thecurrent opportunities available for zero emission commercial vehicles inNorth America • Significant increase in Tanfield's geographic coverage, product rangeand scale of operations - the Enlarged Group will have a global sales footprintand a more efficient global supply chain • Enlarged and diversified powered access customer base, providingimmediate cross-selling opportunities • The Directors believe the Acquisition will deliver product synergiesand little overlap between Tanfield's Powered Access division and Snorkel andthat there is substantial operating and revenue synergy potential across theEnlarged Group • The Directors expect the Acquisition to be earnings enhancing in thefirst full financial year following the acquisition • Smith Electric Vehicles continues to make good progress with majorfleet operators for its higher function commercial electric vehicles. Tanfield'sPowered Access division, led by UpRight Powered Access, continues to demonstratesignificant growth Commenting, Darren Kell, Chief Executive of Tanfield said: "This is a transformational acquisition for Tanfield, significantlystrengthening our position as a leading global manufacturer of aerial workplatforms and commercial electric vehicles. This acquisition is an excellent strategic and cultural fit with our existingUpRight Powered Access division. The addition of manufacturing capability in the USA and Australasia, plusestablished sales networks in these territories, will create a Powered Accessdivision with comprehensive global coverage. There is very little overlap between the UpRight and Snorkel product ranges;presenting significant cross-selling opportunities in UpRight's core territoriesof Europe and the Middle East and Snorkel's core markets of North America andthe Asia-Pacific region. This fundraising will also provide Tanfield with the resources to establishSmith Electric Vehicles in North America, with a view to recreating thefirst-to-market success already enjoyed by Smith Electric Vehicles in the UK andmainland Europe." For further information: The Tanfield Group Plc Tel: +44(0)845 1557 755Darren Kell, Chief Executive dan.jenkins@tanfieldgroup.comCharles Brooks, Finance Director Fishburn Hedges Tel: +44(0)20 7839 4321James Benjamin Mob: +44(0) 7747 113 930 tanfield@fishburn-hedges.co.uk Cenkos Securities plc Tel: +44(0)20 7397 8900Stephen Keys St. Helen's Capital plc Tel: +44(0)20 7628 5582Seb WykehamRuari McGirr website: www.tanfieldgroup.co.uk THE TANFIELD GROUP PLC Proposed acquisition of Snorkel Holdings LLC and Proposed placing to raise £115 million The Company announces that it has entered into a conditional agreement toacquire Snorkel Holdings LLC and a conditional placing agreement to raise £115million (before expenses) through an institutional placing of new OrdinaryShares by Cenkos Securities, the Company's Nominated Adviser and Joint Brokerand St Helen's Capital plc, the Company's Joint Broker. It should be noted that the Placing is subject to the terms of a placingagreement between the Company, the Directors and Cenkos (the "PlacingAgreement") and is conditional upon, inter alia, the passing of the specialresolution at the Extraordinary General Meeting of the Company to be held on 23July 2007 the ("Extraordinary General Meeting") and the Placing Agreementotherwise becoming unconditional in all respects and not being terminated inaccordance with its terms. Both the Acquisition and the Placing are subject toadmission of the shares to be issued under the Placing to AIM ("Admission"). The Directors will utilise the net proceeds of the Placing to fund the cashportion of the consideration for the Acquisition as well as to provide Snorkelwith additional working capital which the Directors expect will expedite growthand improve margins through more efficient purchasing. In addition, the placingproceeds will be used to pay down approximately $25million (£12.5 million) ofdebt in the Snorkel Group and will leave Tanfield, as enlarged by theAcquisition (the "Enlarged Group") debt free. The Directors also intend to use aproportion of the proceeds to provide additional working capital to establishSmith Electric Vehicles in the USA which the Directors anticipate will put theCompany into a position to capitalise on the current opportunities available forzero emission commercial vehicles in North America. The Directors believe that the Acquisition will allow the combined businesses ofSnorkel and the Company's existing subsidiary, UpRight, to compete effectivelywith the industry leaders in nearly all product categories and, at the sametime, provide the Enlarged Group with a global sales footprint and moreefficient supply chain. The Acquisition The Company has conditionally agreed to acquire the entire share capital ofSnorkel for US$100.0 million (£50.0 million) and will assume approximatelyUS$25.0 million (£12.5 million) of debt. The Acquisition is to be satisfied asto US$95.0 million in cash, which is to be funded from the Placing, and isdescribed in further detail below. In addition, the Acquisition is to besatisfied as to US$5 million by granting to the Sellers the right to receive theConsideration Shares on the first or second anniversary of completion of theAcquisition. The number of Consideration Shares to be issued by the Company maybe reduced by the amount of any claims made by the Company against the Sellersunder the representations, warranties and indemnities given by the Sellers inthe Acquisition Agreement. US$5.0 million of the cash consideration will be paid into an escrow account soas to be available to meet any claims made by the Company against the Sellersunder the representations, warranties and indemnities given by the Sellers inthe Acquisition Agreement. Snorkel is a worldwide supplier of high quality industrial aerial equipmentincluding self-propelled booms, articulated and telescopic booms, aerial liftsand self-propelled scissorlifts. The products are designed for use on a widerange of surfaces and are supported by service, parts and training teams. The Directors believe that the geographic fit between Snorkel and the Company tobe complimentary. Snorkel has a significant sales presence in North America,Australia and New Zealand, whereas the Company's subsidiary, UpRight, has adistribution network concentrated in Western and Eastern Europe, Russia and theBaltics, the Middle East and the Asia-Pacific region. In summary, the Directorsbelieve that the Enlarged Group will have a strong distribution and salespresence in North and South America, Australasia, Europe, the Middle East andAsia-Pacific region and will have manufacturing capabilities in Europe, the USAand Australasia. The Directors expect the Enlarged Group to benefit from globalsupply chain efficiencies. In addition, the Directors believe Snorkel's product range, which is focussed onmedium to large articulated and telescopic booms, to be an excellentcomplementary fit with the Company's existing UpRight product suite, which has aparticularly strong small to medium sized lift offering. There is little productoverlap and the Directors expect the Enlarged Group to benefit fromcross-selling opportunities, with a comprehensive product portfolio enabling itto meet customers' requirements. For the year ended 31 December 2006, Snorkel had turnover of US$131.49 million(£65.75 million) and achieved profit before tax of US$9.65 million (£4.83million); net assets at 31 December 2006 were US$17.59 million (£8.80 million).The Directors expect the Acquisition to be marginally earnings enhancing for theCompany in the financial year ending 31 December 2007 and significantlyenhancing thereafter. Completion of the Acquisition is subject to a number of conditions, includinginter alia: the passing of a special resolution at the Extraordinary GeneralMeeting; completion of the Placing in accordance with the terms of the PlacingAgreement and Admission. In addition, the Company has reserved the right toterminate the Acquisition in the event that there is a material breach ofwarranty or condition before Admission. The Acquisition is also conditional onclearances being obtained from, or any waiting period having expired withoutchallenge by, the United States antitrust enforcement agencies under the UnitedStates Hart-Scott-Rodino Improvements Act of 1976. The principal agreement forthe Acquisition is governed by the laws of the State of Kansas. Smith Electric Vehicles USA The higher function zero emission vehicles produced by Smith Electric Vehiclesare receiving significant interest from major fleet operators based in NorthAmerica. Some of the Placing proceeds will be used to provide working capital toestablish manufacturing capabilities in the USA for Smith Electric Vehicles'product portfolio and the Directors expect the launch of a US version of theSmith Edison van and the Smith Newton truck in early 2008. The Directors believethat the US market represents a significant opportunity for Smith ElectricVehicles and one that requires investment in assembly facilities as well aswider infrastructure to support vehicles in the field. The Directors intend to leverage Tanfield's existing UpRight distributionnetwork in Europe, the Middle East and Asia-Pacific, along with the existingSnorkel support infrastructure in Australasia and the USA, to provide globalservice and maintenance for Smith products. The Placing The Placing will raise £115million (before expenses) for the Company. ThePlacing is subject to the terms of the Placing Agreement between CenkosSecurities, the Company and the Directors which contains, inter alia, warrantiesand indemnities in favour of Cenkos Securities in relation to the Group and anyinformation made available to investors relating to the Placing. The shares issued under the Placing will, when issued, rank pari passu in allrespects with the existing Ordinary Shares, including the rights to alldividends and other distributions declared, made or paid following Admission.Application will be made for the Placing Shares to be admitted to AIM. Following strong appetite from institutional investors for the Placing, RoyStanley, Darren Kell and Brendan Campbell have, conditional upon completion ofthe Acquisition, agreed to exercise options over 3,500,000, 2,972,000 and300,000 Ordinary Shares (the "Option Shares") respectively and to sell8,500,000, 2,972,000 and 300,000 Ordinary Shares respectively at the PlacingPrice. Following these sales, Roy Stanley, and Brendan Campbell will hold19,649,292 and 6,119 Ordinary Shares respectively, representing 6.71 per cent.and 0.002 per cent. of the Company's issued share capital as enlarged by thePlacing. In addition, following the sales, Roy Stanley, Darren Kell and BrendanCampbell will hold options over 4,500,000, 6,556,671 and 1,950,000 OrdinaryShares respectively with Darren Kell holding a further option to acquire3,052,170 Ordinary Shares currently held by Roy Stanley. Current trading and prospects Smith Electric Vehicles continues to make good progress with major fleetoperators for its higher function commercial electric vehicles and recently wonits first contract from the Royal Mail, which has ordered both the Edison andNewton higher function delivery vehicles, for trials. The vehicles will bedeployed in parcel and post distribution operations in London. In line with a growing order book and increased interest in both Newton andEdison, Tanfield is installing extra electric vehicle production capacity atVigo Centre, its 250,000sq ft assembly facility in Tyne & Wear, UK. Tanfield's Powered Access division, led by UpRight Powered Access, continues todemonstrate significant growth. The re-launch of the AB46 articulated boom liftwas well received at two major construction equipment exhibitions; internationalshow Bauma and UK exhibition SED 2007 and the Company has received orders forover two hundred AB46 machines to date. Installation of the third crane line at Vigo Centre is nearing completion andwill further increase production output, which presently stands at an averagerate of over 130 machines per week. UpRight is making strong progress in the USA. During May 2007, the facility inFresno, California built 150 machines, well in excess of its target of 20 unitsper week. UpRight has also won an order from a major US end user for 80machines, to the value of US$800,000 (£400,000). The proposed Acquisition will, the Directors believe, bring significant benefitsto the Group and the Directors continue to view the future with confidence. Extraordinary General Meeting In order that the Company is able to implement the issue of the Placing Sharesit will be necessary for the Company to increase its authorised share capital,authorise the Directors to allot relevant securities under section 80 of theCompanies Act 1985 and dis-apply statutory pre-emption rights which arise underthe provisions of section 89 of that Act and a resolution to this effect will beproposed in the circular containing the notice of Extraordinary General Meetingto be posted to shareholders today. If the resolution to be proposed at the Extraordinary General Meeting is passed,following Admission and admission of the Option Shares, the Company's authorisedand issued share capital will be 500,000,000 shares and 370,286,089 sharesrespectively. Notes to editors The Tanfield Group Plc is the world's leading developer and manufacturer ofroad-going commercial electric vehicles and aerial work platforms. Tanfield isheadquartered in Newcastle with operations in the USA and Japan. It has two maindivisions: Smith Electric Vehicles, was founded in 1920 and acquired by Tanfield in October2004. Since its acquisition, Smith is developing into a world leader in newtechnology electric vans and trucks with greatly enhanced performance, speed andrange capabilities. This makes them attractive for all fleet operators in largetowns, cities and closed industrial environment. For the first time, these fleetoperators have an economically viable, zero emission alternatives to usingdiesel vans and trucks. Smith has an unrivalled UK-wide service and supportnetwork, which already maintains over 5,000 vehicles for major fleet operators.This core element of the business is beginning to fulfil its potential in termsof addressing the requirements of large urban fleet operators, who want toreduce their operational costs and more importantly, greatly reduce their carbonfootprint. Smith's airport offering is complemented by two specialist airportvehicle sub-divisions; Jumbotugs and Norquip. www.smithelectricvehicles.com UpRight Powered Access, is firmly established as the UK's biggest manufacturerof self-propelled aerial work platforms (such as "cherry-pickers", "scissorlifts", "trailer mounts", etc) and UpRight is globally one of the industry'sstrongest aerial lift brands in what is a $7bn market. UpRight has assemblyfacilities in the UK and USA, plus a wholly-owned subsidiary in Japan. Productsare sold through a strong global network of over 150 independent, full-servicedistributors across Europe, North America, Middle East and Asia-Pacific regions.Tanfield has been successful in extending the UpRight product range andachieving significant increases in average weekly order intake, boosted in partby working at height regulations. www.upright.com Cenkos Securities ("Cenkos"), which is authorised and regulated by the UKFinancial Services Authority, is acting for Tanfield and no one else inconnection with the subject matter of this announcement and will not beresponsible to anyone other than Tanfield for providing the protectionsafforded to clients of Cenkos or for providing advice in relation to thesubject matter of this announcement.. St Helen's Capital plc ("St Helen's"), which is authorised and regulated by theUK Financial Services Authority, is acting for Tanfield and no one else inconnection with the subject matter of this announcement and will not beresponsible to anyone other than Tanfield for providing the protections affordedto clients of St Helen's or for providing advice in relation to the subjectmatter of this announcement.. This announcement does not constitute an offer to sell or the solicitation of anoffer to acquire ordinary shares in the share capital of Tanfield ('Shares'). The information contained in this announcement is not for release, publicationor distribution to persons in the United States, Australia, France, Canada,Japan, New Zealand or the Republic of South Africa. This announcement is not anoffer of securities for sale into the United States. The Shares have not beenand will not be registered under the US Securities Act of 1933, as amended, andmay not be offered or sold, directly or indirectly, in the United States absentregistration or an exemption from registration. The Shares have not been andwill not be registered with any regulatory authority of any state within theUnited States. There will be no public offer of securities in the United States. Certain statements in this announcement are forward-looking statements. Theseforward-looking statements speak only as at the date of this announcement. Suchstatements are based on current expectations and beliefs and, by their nature,are subject to a number of known and unknown risks and uncertainties that couldcause actual results and performance to differ materially from any expectedfuture results or performance expressed or implied by the forward-lookingstatement. There are several factors which could cause actual results to differmaterially from those expressed or implied in the forward-looking statements.These factors include Tanfield's ability to successfully combine the businessesof Tanfield and Snorkel and to realise expected synergies from that combination,changes in global, political, economic, business, competitive, market orregulatory forces, future exchange and interest rates, changes in tax rates andfuture business combinations or dispositions. The information and opinionsexpressed in this announcement are subject to change without notice and none ofTanfield, Cenkos or St Helen's assumes any responsibility or obligation toupdate publicly or review any of the forward-looking statements containedherein, regardless of whether those statements are affected by the results ofnew information, future events or otherwise. No statement in this announcement is intended to be a profit forecast and nostatement in this announcement should be interpreted to mean that Earnings perShare for the current or future financial years would necessarily match orexceed the historical published Earnings per Share. This information is provided by RNS The company news service from the London Stock Exchange