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Tanfield Group's operating loss grows amid joint-venture dispute
21st Aug 2019 08:59
(Sharecast News) - Tanfield Group shares dropped on Wednesday as its interim operating loss deepened due to legal costs relating to the company's interest in Snorkel International Holdings.
The investing company, which owns 49.0% of the fire fighting equipment company and 5.76% of Smith Electric Vehicles Corp, reported an operating loss of £127,000 for the six month period ended 30 June, which was deeper than the £94,000 it reported for the same period of the year before.
AIM-traded Tanfield forked out additional legal fees linked to its dispute with Snorkel co-owner Xtreme Manufacturing, which requested to exercise a call option to acquire Tanfield's interest in Snorkel through its subsidiary SKL Holdings back in November 2018.
SKL Holdings asserted that the option price to acquire Tanfield's stake was nil and that payment of the priority amount and preferred return were not required, an assertion rejected by Tanfield.
Discussions between the two parties are continuing, but Tanfield maintains that the priority amount and preferred return, being the calculated value placed on the assets that Tanfield transferred to Snorkel, is the minimum payment required to require its interest.
While the group admitted the possibility that the actual realisation of value could be less than the current valuation of £19.1m, though the company said it will "vigorously defend its position" that the priority amount and preferred return is payable if Xtreme attempts to acquire its interest for an unacceptable value.
Tanfield Group shares were down 8.22% at 6.10p at 1028 BST.
The investing company, which owns 49.0% of the fire fighting equipment company and 5.76% of Smith Electric Vehicles Corp, reported an operating loss of £127,000 for the six month period ended 30 June, which was deeper than the £94,000 it reported for the same period of the year before.
AIM-traded Tanfield forked out additional legal fees linked to its dispute with Snorkel co-owner Xtreme Manufacturing, which requested to exercise a call option to acquire Tanfield's interest in Snorkel through its subsidiary SKL Holdings back in November 2018.
SKL Holdings asserted that the option price to acquire Tanfield's stake was nil and that payment of the priority amount and preferred return were not required, an assertion rejected by Tanfield.
Discussions between the two parties are continuing, but Tanfield maintains that the priority amount and preferred return, being the calculated value placed on the assets that Tanfield transferred to Snorkel, is the minimum payment required to require its interest.
While the group admitted the possibility that the actual realisation of value could be less than the current valuation of £19.1m, though the company said it will "vigorously defend its position" that the priority amount and preferred return is payable if Xtreme attempts to acquire its interest for an unacceptable value.
Tanfield Group shares were down 8.22% at 6.10p at 1028 BST.