SHARES in manufacturer Tanfield plunged by more than 40% yesterday after the company announced that its American associate business has shelved plans for a listing on the US stock market.
The Wearside firm owns almost a quarter of the Kansas City-based Smiths Electric Vehicles (SEV), which was founded in Gateshead 94 years ago, before being taken over by Tanfield and then relaunched as a separate business in Kansas.
Tanfield had supported SEV with a £2.2m bridging loan in July ahead of the planned stock market flotation.
The flotation, which offered 4.45m shares priced from £9.80 to £11, was expected to raise around £49m. But there was not enough public interest at the price SEV wanted.
SEV chief executive Bryan Hansel said: “We received significant interest from potential investors, however, we were unable to complete a transaction at a valuation or size that would be in the best interests of our company and its existing shareholders.
“We have instead elected to pursue private financing opportunities to support the execution of our business plan.”
Tanfield’s broker, WH Ireland, said yesterday: “The news is clearly disappointing for Tanfield shareholders but, assuming a further private round can be complete, and early evidence suggests there is genuine support for this, today’s news is a deferral of a liquidity event.”
Tanfield sold off the majority of its electric van-making business to SEV at the start of last year so that it could concentrate on building powered access lifts.
It was hoped that Smith, which still has a North East assembly plant, would benefit from the more welcoming climate for zero emission vehicles in the US, where there is more government support and more grants are available.
However, despite receiving £20m in US government money and attracting customers such as FedEx and Coca- Cola, SEV has made losses of £81m since 2009 and was £17m in the red during the first half of this year.
It has also reduced its manufacturing targets for 2012 from the expected 620 trucks to 380.
SEV had hoped to persuade investors of the benefits of electric vehicles, which it said cost around 22 cents a mile to run compared with 72 cents a mile for diesel competitors.
It said: “We believe our vehicles provide a lower total cost of ownership, which includes a vehicle’s up-front cost as well as ongoing costs such as fuel and maintenance.”
We were unable to complete a transaction at a valuation or size that would be in the best interests of our company