REG - Tanfield Group PLC - Snorkel Investment Update

TanfieldAnnouncement

07/02/2023 07:00

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RNS Number : 0809P  Tanfield Group PLC  07 February 2023

07 February 2023

 

The information contained within this announcement is deemed by the Company to
constitute inside information under the Market Abuse Regulation (EU) No.
596/2014. Upon the publication of this announcement via a Regulatory
Information Service ("RIS"), this inside information is now considered to be
in the public domain

 

 

Tanfield Group Plc

("Tanfield" or the "Company")

 

Snorkel Investment Update

 

 

The Board of Tanfield (the "Board") is pleased to update the market regarding
the Company's ongoing legal proceedings in relation to its investment in
Snorkel International Holdings LLC ("Snorkel"), the aerial work platform
business.

 

Investment Background

 

·    Tanfield is a 49% shareholder in the equity of Snorkel following the
joint venture in October 2013 between the Company and Xtreme Manufacturing LLC
("Xtreme") (the "Contemplated Transaction"), a company owned by Don Ahern of
Ahern Rentals Inc ("Ahern Rentals"), relating to Snorkel.  Tanfield's equity
in Snorkel is owned by its wholly owned subsidiary HBWP Inc ("HBWP") while
Xtreme's equity is owned by its wholly owned subsidiary SKL Holdings LLC
("SKL").

 

·    The Snorkel investment is valued at £19.1m.  The outcome of the US
Proceedings referenced below could have an impact on this valuation.

 

·    On 22 October 2019, the Company announced that it had received a
Summons and Complaint, filed in Nevada (the "US Proceedings") by subsidiaries
of Xtreme, relating to the Contemplated Transaction.

 

·    On 24 October 2019, the Company announced it had become necessary to
issue and serve a claim in the English High Court (the "UK Proceedings")
against its former solicitors acting for the Company at the time of the
Contemplated Transaction.  On 18 October 2022, the Company announced that it
had settled its claims in relation to the UK Proceedings on a no-fault basis.

 

Highlights

 

·    The Company has filed an Answer to Complaint, Verified Second Amended
Counterclaims, and Demand For Trial By Jury (the "Amended Counterclaims") in
relation to the US Proceedings.

 

·    As a consequence of the Amended Counterclaims, the timetable for the
US Proceedings has been rescheduled and a jury trial is currently expected to
take place in early 2024.

 

 

As previously reported in the Company's Snorkel update announcements, for some
time the Board has believed that certain financial performance metrics have
not been in line with the industry averages and work to investigate this is
still ongoing.  However, in part as a result of that work, and following
information obtained through the discovery process, Tanfield has filed its
Amended Counterclaims in relation the US Proceedings. As part of the Amended
Counterclaims, Tanfield has now brought claims in its individual capacity and
derivatively on behalf of Snorkel, against Snorkel's manager SKL (Xtreme's
wholly owned subsidiary), as well as against Don Ahern, Charles Brooks and
Matthew Elvin based on allegations that the aforementioned parties breached
their fiduciary duties by making or allowing decisions to be made that favor,
among others, Xtreme and Ahern Rentals to the detriment of Snorkel and its
minority owner, Tanfield, and by taking deliberate steps to either impair the
profitability of Snorkel for the purposes of lowering any amount owed to
Tanfield upon the exercising of its contractual call option rights, or shift
value away from Snorkel to Xtreme and Ahern Rentals, resulting in a lower
valuation of Snorkel.

 

Tanfield has also brought claims against Xtreme and Ahern Rentals based on
allegations that they knowingly participated in the breaches of fiduciary duty
committed by SKL, Don Ahern, Charles Brooks and Matthew Elvin by participating
in the self-interested, commercially unreasonable transactions, and
benefitting from the deliberate acts designed to shift value from Snorkel to
Ahern Rentals and Xtreme, and to the detriment of Snorkel and its minority
owner, Tanfield.  Tanfield has also brought a claim for unjust enrichment
alleging that Don Ahern, Ahern Rentals and Xtreme were given, and knowingly
accepted, benefits unjustly derived as a result of their intentional
misconduct described above.  In connection with these claims, Tanfield,
individually and/or derivatively on behalf of Snorkel, is seeking damages,
punitive damages and its attorney fees and costs.

 

As announced on 18 October 2022, the Company is now focussed entirely on the
US Proceedings however, as a consequence of the Amended Counterclaims, the
timetable for the US Proceedings needs to be rescheduled and a jury trial is
currently expected to take place in early 2024, as opposed to the summer of
2023.

 

The Board continue to believe that a positive outcome to the US Proceedings is
possible.  So far as it is necessary, the Company will continue to vigorously
defend its position and advance its Amended Counterclaims, whilst continuing
to seek advice.

 

Further updates will be provided to Shareholders as and when appropriate.

 

 

 

For further information:

 

Tanfield Group
Plc
020 7220 1666

Daryn
Robinson

 

WH Ireland Limited - Nominated Advisor / Broker

James Joyce / Enzo Aliaj
 
                                020 7220 1666

 

 

 

 

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