For immediate release 13 February 2012
Tanfield Group Plc
("Tanfield" or the "Company")
Placing of new Ordinary Shares
Tanfield (AIM: TAN), a leading manufacturer of aerial work platforms, is pleased to announce that it has conditionally raised gross proceeds of approximately £12 million by way of a placing of 29,268,293 new ordinary shares of 5p each (the "Placing Shares") at a price of 41p per share (the "Placing").
The placing by WH Ireland, as Nomad and broker to the Company, is for an aggregate of 29,268,293 new Ordinary Shares at a price of 41 pence per new Ordinary Share to institutional and other investors, comprising 9,407,720 shares to be issued under existing authorities and 19,860,573 further shares, the issue of which is conditional on the passing of the Resolution.
Highlights
· Aerial Work Platform market demand recovering - driven by replacement requirements
· During the first half of 2011, the Company's turnover rose 25% to £24.6 million while the outstanding order book rose 170% to £20.9 million
· Ability to meet orders currently restricted by working capital constraints and supply chain bottlenecks
· Funds raised from Placing expected to alleviate bottlenecks and accelerate the expected return to profitability
Darren Kell, Chief Executive of Tanfield, commented:
"The additional working capital raised by this Placing will help to alleviate the bottlenecks within our supply chain allowing us to increase throughput, reduce lead times for customers and generate purchasing efficiencies. As a result, we believe it should accelerate our return to profitability and help to cement our position as one of the leading global manufacturers in the aerial work platform industry."
For further information:
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Tanfield Group Plc Darren Kell, Chief Executive Charles Brooks, Finance Director
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0845 155 7755 |
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WH Ireland James Joyce / Nick Field - Corporate Finance Seb Wykeham / Ruari McGirr - Corporate Broking
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020 7220 1666 |
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Buchanan Charles Ryland Nicola Cronk Catherine Breen
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020 7466 5000 |
The following text is extracted from the Letter from the Chairman of Tanfield in the Company's Circular to Shareholders which is due to be published and sent to Shareholders later today. A copy of the circular will be available on the Company's website at www.tanfieldgroup.com. The General Meeting is to be held at its registered office, at Vigo Centre, Birtley Road, Washington, Tyne and Wear NE38 9DA at 10.00 a.m. on 8 March 2012.
Global demand for aerial work platforms is rapidly returning, driven by major fleet operators replacing ageing equipment. Tanfield is also benefiting as a result of the increased strength of the Snorkel brand's international distributor network. As a result, pricing has improved and margins have increased. The increased demand has however created bottlenecks as the supply chain struggles to restore the capacity lost during the protracted downturn. During the first half of 2011, the Company's turnover rose 25 per cent. to £24.6 million while the outstanding order book rose 170 per cent. to £20.9 million.
The Company's management is working hard to resolve the supply chain issues and bring orders through to sales at a faster rate. In some cases, however, additional volume commitments and other incentives are required in order to prime the supply chain and accelerate delivery of particular parts. The Company's need to husband scarce working capital resources has limited its ability to make such commitments and capitalise fully on the growth opportunities available.
The additional working capital raised by the Placing will be used to help alleviate the bottlenecks within the supply chain. It will allow the Company to place larger orders with its suppliers, make strategic investments in key supply channels and, where necessary, offer incentives to prioritise supply chain commitments from key partners. These actions should reduce overall supplier lead times.
Shorter supplier lead times will allow the Company to take advantage of rising customer order books.
The Directors currently estimate that the Company would break even at an operating profit level on annual revenues of approximately £90 million.
On 24 October 2011, Tanfield announced that Smith had filed a Form D with the SEC announcing a private placing of $30 million of new convertible notes and warrants. As part of the Smith Placing, Tanfield converted $1.99 million of deferred consideration related to Smith's acquisition of the Smith Electric Vehicles business earlier this year into a convertible note (the "Note") and warrant. The Note converted to a new class of preferred equity securities in Smith on the 4 November 2011. Following the Smith Placing and the conversion of the Note, the Company holds 5,259,192 ordinary shares in Smith on a fully diluted basis.
Following the completion of the Smith Placing, Smith paid to Tanfield a significant proportion of the remaining deferred consideration, plus accrued interest, totalling approximately $5.6 million. These funds will also be used to finance the ongoing development of the Company's Snorkel Powered Access business.
On 9 November 2011, Smith filed a Form S-1 registration statement with the SEC with respect to a proposed initial public offering on NASDAQ. The filing of the Form S-1 is for an initial public offering of Smith's common stock on NASDAQ, and is subject to the SEC's review.
In its interim results issued on 29 September 2011, the Board stated that it expected the trading
performance in the second half of 2011 to be similar to the first half. This was confirmed in the
Company's pre-close statement of 9 February 2012.
The Placing Shares, which, upon issue, will rank pari passu with the Existing Ordinary Shares, have
been conditionally placed by WH Ireland with institutional and other investors.
Pursuant to the Placing Agreements entered into today between WH Ireland and the Company, WH Ireland, as agent for Tanfield, has agreed to use its reasonable endeavours to place the Placing Shares with investors. The Placing Agreements contain warranties and indemnities given by the Company with respect to its business and certain matters connected with the Placing. Under the Placing Agreements the Company has agreed to pay WH Ireland a commission of 4.5 per cent. of the aggregate value of the Placing Price of the Placing Shares, and a corporate finance fee of £20,000 together with WH Irelands' reasonable expenses of or incidental to the Placing, the issue of the Placing Shares and Admission.
The issue of the First Tranche Placing Shares is conditional upon, amongst other things, Admission of the First Tranche Placing Shares but is not conditional upon the Resolution being passed at the General Meeting, accordingly, Admission of the First Tranche Placing Shares is expected to occur before the holding of the General Meeting.
The issue of the Second Tranche Placing Shares is conditional, inter alia, on approval by Shareholders at the General Meeting on 8 March 2012 of the Resolution, on the Placing Agreement relating to the Second Tranche Placing Shares not being terminated prior to Admission and on Admission of the Second Tranche Placing Shares becoming effective on or before 8.00 a.m. on 9 March 2012 (or such later time and/or date as the Company and WH Ireland may agree, but in any event not later than 8.00 a.m. on 30 April 2012). The Placing is not being underwritten.
The Placing Price of 41 pence per Placing Share represents a discount of approximately 10.6 per cent. to the closing mid-market price per Ordinary Share on 10 February 2012, being the last dealing day prior to the date of this announcement.
Subject to the passing of the Resolution at the General Meeting, application will be made to London Stock Exchange for the Second Tranche Placing Shares to be admitted to trading on AIM. Subject to, inter alia, Admission becoming effective, dealings in the Second Tranche Placing Shares are expected to commence on AIM at 8.00 a.m. on 9 March 2012.
The Placing Shares represent approximately 30.9 per cent. of the Company's Existing Ordinary Shares and will, when issued, represent approximately 23.6 per cent. of the Enlarged Share Capital.
Following Admission of the First Tranche Placing Shares, the Company will have 103,974,938
Ordinary Shares in issue and following Admission of the Second Tranche Placing Shares this number will further increase to 123,835,511 Ordinary Shares in issue. These figures may be used by Shareholders, from Admission of both the First Tranche Placing Shares and the Second Tranche Placing Shares respectively as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FSA's Disclosure and Transparency Rules.
Expected timetable of principal events
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2012 |
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Publication of Circular |
13 February |
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Admission and commencement of dealings on AIM of the First Tranche Placing Shares |
8.00am on 17 February |
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Latest time and date for receipt of Forms of Proxy |
10.00 a.m. on 6 March |
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General Meeting |
10.00 a.m. on 8 March |
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Admission and commencement of dealings on AIM of the Second Tranche Placing Shares |
8.00 am on 9 March |
Issue statistics
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Placing Price
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41p |
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Number of Existing Ordinary Shares
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94,567,218 |
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Number of Placing Shares being placed on behalf of the Company
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29,268,293 |
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Estimated net proceeds of the Placing receivable by the Company
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£11.4 million |
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Number of Ordinary Shares in issue immediately following Admission of the Second Tranche Placing Shares
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123,835,511 |
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Number of Placing Shares as a percentage of the Enlarged Share Capital |
23.6% |
Definitions
In this announcement, unless the context otherwise requires or provides, the expressions set out below bear the following meanings:
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"Act" |
the Companies Act 2006, as amended from time to time
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"Admission" |
the effective admission of the First Tranche Placing Shares or Second Tranche Placing Shares, or both, as relevant, to trading on AIM pursuant to the AIM Rules for Companies
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"AIM" |
the market of that name operated by the London Stock Exchange
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"AIM Rules" |
the "AIM Rules for Companies" and the "AIM Rules for Nominated Advisers" published by the London Stock Exchange for AIM companies, governing the admission to and the operation of AIM, as amended from time to time
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"Board" or "Directors" |
the directors of Tanfield
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"Capita Registrars" or the "Registrar" |
Capita Registrars Limited
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"Company" or "Tanfield" |
Tanfield Group Plc (company registration number: 04061965)
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"Enlarged Share Capital" |
the Existing Ordinary Shares as enlarged by the Placing Shares
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"Existing Ordinary Shares" |
the Ordinary Shares in issue as at the date of this announcement
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"First Tranche Placing shares" |
up to 9,407,720 new Ordinary Shares, to be allotted and issued conditional upon, amongst other things, their Admission but not conditional upon the passing of the Resolution at the General Meeting
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"FSA" |
the Financial Services Authority of the United Kingdom
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"General Meeting" |
the general meeting of the Company convened for 10.00 a.m. on 8 March 2012, notice of which is set out in the Circular, or any adjournment of such meeting
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"London Stock Exchange" |
London Stock Exchange Plc
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"NASDAQ" |
the NASDAQ Global Market
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"Notice of General Meeting" |
the notice of General Meeting as set out in the Circular
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"Ordinary Shares" or "Shares" |
ordinary shares of 5 pence each in the capital of the Company
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"Placing" |
the conditional placing of 29,268,293 new Ordinary Shares at the Placing Price
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"Placing Agreements" |
the conditional agreements in respect of the First Tranche Placing Shares and the Second Tranche Placing Shares entered into on 13 February 2012 between the Company and WH Ireland in relation to the Placing
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"Placing Price" |
41 pence per Ordinary Share
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"Placing Shares" |
the First Tranche Placing Shares and Second Tranche Placing Shares
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"Resolution" |
the resolution set out in the Notice of General Meeting attached to the Circular
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"SEC" |
the United States Securities and Exchange Commission
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"Second Tranche Placing Shares" |
up to 19,860,573 new Ordinary Shares, to be allotted and issued conditional upon, amongst other things, the passing of the Resolution at the General Meeting and their Admission pursuant to the Placing Agreements
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"Shareholders" |
persons who are registered holders of Ordinary Shares from time to time
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"Smith" |
Smith Electric Vehicles Corp., a business registered in the United States of America in which the Company owns 5,258,814 shares, representing approximately 27.22% on a fully diluted basis
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"Smith Placing" |
a private placing by Smith of $30 million of new convertible notes and warrants completed on 24 October 2011
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"UK" or "United Kingdom" |
the United Kingdom of Great Britain and Northern Ireland
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"WH Ireland" |
WH Ireland Limited, the Company's nominated adviser and broker
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"$" |
the lawful currency of the United States of America
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"£" or "Sterling" |
the lawful currency of the United Kingdom
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