Information  X 
Enter a valid email address

Tanfield Group PLC (TAN)

  Print   

Monday 31 January, 2022

Tanfield Group PLC

Snorkel Legal Proceedings Update

RNS Number : 0454A
Tanfield Group PLC
31 January 2022
 

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 Legal Proceedings Update

 

 

The Board of Tanfield (the "Board") is pleased to update the market on 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 between the Company and Xtreme Manufacturing LLC ("Xtreme") (the "Contemplated Transaction"), a company owned by Don Ahern of Ahern Rentals Inc, relating to Snorkel, in October 2013.

 

· The Snorkel investment is valued at £19.1m.  The outcome of the US and UK 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 against Ward Hadaway (the "UK Proceedings"), the solicitor acting for the Company at the time of the Contemplated Transaction, in order to fully protect the Company's rights pending the outcome of the US Proceedings.  

 

· On 26 February 2021, Ward Hadaway were granted permission to join Foulston Siefkin LLP ("Foulston Siefkin"), Tanfield's US based law firm who were retained in 2013 to draft the documents governed by US law relating to the Contemplated Transaction, into the UK Proceedings in order to bring an additional claim for contribution or indemnity against them.

 

Highlights

 

· Due to the ongoing deficiency in the production of documents by Snorkel in the US Proceedings still not being fully resolved, it has once again become necessary to delay the trial.  At present, it is expected that the trial window will not begin until August 2022 at the earliest. 

 

· As a result of Ward Hadaway joining Foulston Siefkin into the UK Proceedings the Company, after taking advice, has recently amended its own claim in the UK Proceedings to include Foulston Siefkin as a second defendant, in order to ensure its position in those proceedings are fully protected.  This has had no impact on the trial date for the UK Proceeding which remains set for November 2022.   

 

US Proceedings

 

On 22 October 2019, the Company announced it had received a Summons and Complaint in relation to the US Proceedings, regarding the purported call option notice announced by the Company in November 2018, in which Snorkel and Xtreme continued in their attempt to take ownership of Tanfield's 49% investment in Snorkel for nil consideration, having not paid any consideration to Tanfield for Xtreme's acquisition of the initial 51% of the joint venture.  It is purported by Snorkel / Xtreme that no consideration is due to Tanfield before they can compel the Company to transfer its remaining 49% investment in Snorkel to them.  The Board notes that Snorkel / Xtreme make this claim despite declaring in various K-1 US tax declarations that Tanfield, via its subsidiary HBWP Inc, contributed properties with a net fair market value of around $45.5m to Snorkel International Holdings LLC in October 2013.  The Board continues to believe that the contractual agreements require that the preferred interest (valued at £19.1m) is paid prior to, or in conjunction with, a call option notice.

 

On 30 March 2020, the Company announced that despite ongoing attempts to resolve the dispute amicably, Snorkel and Xtreme filed a motion in favour of their claims and against claims brought by Tanfield, without a trial (the "Motion").  The Board vehemently disagreed with the Motion and believed that it was without merit and subsequently, on 3 April 2020, the Company announced that the judge took the Motion under advisement and the court determined that there appear to be genuine issues of material fact pertaining to the contract, its terms, and its execution and therefore the Motion brought by Snorkel and Xtreme was denied. 

 

As announced on 26 January 2021 and 20 May 2021, the parties had been producing documents as part of the ongoing discovery process but despite the Board's best efforts to keep procedural matters to the agreed timetable, there had been delays relating to the production of documents by Snorkel / Xtreme.  Despite receiving assurances that all requested document productions would be forthcoming, there remain deficiencies in the production of documents.  Consequently, it has recently became necessary to again move back the trial window.  At present, it is expected that the trial window will not begin until August 2022 at the earliest.   

 

As announced on 24 August 2021, subpoenas were issued to third parties in an attempt to obtain some of the missing documents by other means, which has yielded some success.  The Board continue to press for the remaining deficient document production to be fully completed so that the parties can proceed without further delay through the remaining stages of the proceedings.   As a result, the work to investigate historic margins, which includes ensuring all related party transactions have taken place at an arm's length basis, as previously reported on 24 August 2021, are ongoing.

 

UK Proceedings

 

On 24 October 2019, the Company announced that it had been necessary to issue and serve a claim against Ward Hadaway (or "the UK Firm") in order to fully protect the Company's rights pending the outcome of the US Proceedings and to ensure the Company could hold Ward Hadaway to account for its role in and/or advice in relation to the Contemplated Transaction if necessary.

 

Ward Hadaway was Tanfield's appointed solicitor in 2013 at the time of the Contemplated Transaction, a position the UK Firm held from before the Company was listed on to the Alternative Investment Market ("AIM") in 2000, through to it becoming apparent in 2019 that a dispute between the Company and Ward Hadaway was inevitable.  That dispute, and the subsequent UK Proceedings, was crystalised as a result of the position taken by Ward Hadaway in opposition to a proposed standstill agreement that would have fully protected the Company's rights pending the outcome of the US Proceedings, without the need for a claim to be brought against the UK Firm at that time. 

 

On 26 February 2021, Ward Hadaway were granted permission to join Foulston Siefkin (the "US Firm"), Tanfield's US based law firm who were retained in 2013 to draft the documents governed by US law relating to the Contemplated Transaction, into the UK Proceedings in order to bring an additional claim for contribution and/or indemnity against them. 

 

Foulston Siefkin was, from at least 2007, Tanfield's US lawyer until it became apparent in 2018 that a dispute with Snorkel / Xtreme was going to arise.  Unlike Ward Hadaway, Foulston Siefkin were amenable to agreeing a standstill agreement that fully protected Tanfield's rights pending the outcome of the US Proceedings, without the need for a claim to be brought against them at the time the UK Proceedings commenced.

 

As the principal contracts in the Contemplated Transaction were to be governed by the laws of the US state of Nevada, Foulston Siefkin were retained by the Company in connection with all aspects of the Contemplated Transaction governed by US law. 

 

It is claimed by Ward Hadaway that, insofar as Tanfield establish that the Circular was inaccurate, such an inaccuracy would be the fault of Foulston Siefkin as the firm responsible for drafting the principal transaction documents and for not ensuring that the Circular contained an accurate description of those documents.  Also, insofar as Tanfield establish that the terms of the principal transaction documents did not mirror the instructions provided by Tanfield, in respect of the intended terms of those documents, that as the party responsible for taking instructions from the Company, any fault would be that of Foulston Siefkin.  Furthermore, it is claimed by Ward Hadaway that it was the duty of Foulston Siefkin, and not Ward Hadaway, to provide adequate advice to Tanfield in order to ensure that the Company, its shareholders and its Board were fully informed and understood what the terms of the Contemplated Transaction were.

 

 As a result of Ward Hadaway joining Foulston Siefkin into the UK Proceedings, after taking advice, the Company has recently amended its claim in the UK Proceedings to include Foulston Siefkin as a second defendant, in order to ensure its position in those proceedings are fully protected.  This has had no impact on the trial date for the UK Proceeding which remains set for November 2022. 

 

Whilst the Board vehemently deny the claims made by Snorkel and Xtreme in the US Proceedings, a major part of the UK Proceedings is premised on the Company being incorrect in relation to its understanding of the Contemplated Transaction and the position it has taken in the US Proceedings.  If that were the case, the UK Proceedings are now that, in summary, Ward Hadaway and/or Foulston Siefkin were retained to advise and assist the Company in connection with the Contemplated Transaction, in particular the preparation of the principal transaction documents, the Circular and the process of obtaining the required Shareholder and Board approvals before the Contemplated Transaction could be entered into, and that both firms and/or either firm were in breach of duty in carrying out that role, the result of which has led to the Company suffering substantial financial loss.

 

A future stage of the UK Proceedings will be the preparation of expert accountancy evidence which seeks to value the Snorkel division and assets which were contributed to the joint venture as part of the Contemplated Transaction.  The Board note that, in 2014, an appraisal report of the tangible and intangible assets of Snorkel at the time of the Contemplated Transaction was prepared for Xtreme, by an independent expert on a fair value basis, which the Board understand was the basis for the $45.5m net fair market value that Snorkel / Xtreme declared was contributed by Tanfield, via its subsidiary HBWP Inc, to Snorkel International Holdings LLC.  This independent expert report underpins the Board's continued belief that the value of the Snorkel division at the time of the Contemplated Transaction was substantial.

 

The Board remain hopeful that a positive outcome to either/both the US Proceedings and UK Proceedings is possible and, so far as it is necessary, the Company will continue to vigorously defend and advance its position in both proceedings, 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 / Megan Liddell  020 7220 1666

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
STRUWRBRUWUAUAR

a d v e r t i s e m e n t