TANFIELD Group, which makes cherry pickers for the construction industry, has raised £2m through a share placing to support US associate company, Smith Electric Vehicles.
The manufacturer – based in Washington, Tyne and Wear – has placed over five million new ordinary shares at a price of 42p, raising proceeds of £2.2m.
Tanfield owns a 24% stake in American firm Smith, which has roots in County Durham, and has agreed to provide a short-term bridging loan to provide liquidity support prior to Smith’s planned initial public offering (IPO).
The loan will mature in 180 days and Smith has also secured bridge financing from its key shareholders, totalling £7.7m.
Chief executive Darren Kell said: “Given that Tanfield is Smith’s largest shareholder, Tanfield is keen to support the company in its planned IPO.
“This fundraising will enable Tanfield to participate in a lending facility that gives Smith that support, without risking the progress achieved year to date in the powered access business.”
In the first quarter of 2012, Tanfield raised approximately £11.4m of expenses by placing of new equity to invest in its supply chain.
The move allowed the firm to grow its global powered access business in response to greater demand.
Since that date, it has secured increased volumes from its suppliers, enabling increased output from all of its manufacturing sites.
Demand for powered access products has held up and, as its lead times come down, order intake rates continue to rise.
Tanfield continues to expect to reach break-even volumes during the second half of the current financial year.
Given the importance of managing working capital in its growth process, Tanfield chose to raise additional funds to support Smith rather than risk jeopardising the growth in its powered access business.
The Washington company took the decision to sell most of the electric van-making business to Kansas City-headquartered Smith because of the greater availability of government grants to develop the zero-carbon emission vehicles in the US.
In 2010, the business won around £20m of funding in the US.
Tanfield said that the worldwide order book for its Snorkel-branded cherry pickers had shot up by almost 300% in the year to the end of December.
It now has £30.5m of work in the pipeline, compared to £7.7m in December 2010.