Tanfield Group, which acquired Smith Electric Vehicles in England in 2004 and formed Smith Electric Vehicles US Corp in 2009, announced its support in restructuring Smith Electric.
Tanfield recently signed an agreement with Smith Electric Vehicles US, which conditionally binds it to sign certain consents to allow Smith to raise funding up to $30 million.
"The Smith Board plan is to convert all debt into common stock prior to listing on the OTCBB and simultaneously raise up to $30 million. It is then proposed that Smith seeks a full listing on a U.S. National Exchange."
This announcement comes after Sinopoly Battery announced up to $42 million investment to restore production of Smith Electric Vehicles.
"The Smith Board have made significant progress in its plan and succeeded in getting a major investment commitment from an important strategic partner, Sinopoly, as announced on 12 May 2014. The Smith Board continue to work hard to achieve their goal."
"The Tanfield Board has evaluated the balance of risk and reward associated with the Smith restructuring plan. On balance it remains positive that supporting this plan represents the best possible outcome for all stakeholders of Smith, including Tanfield. The Tanfield Board considers that in entering this agreement it has sought to fulfil its obligation to its shareholders in seeking to optimise the value on its investment in Smith."
After the transactions, Tanfield Group should hold between 4% and 5% of Smith shares. Here are some details:
The agreement covers the following:
Debt: The total debt owed by Smith to Tanfield Group will be consolidated into the AA round of funding which has rights to a 30% uplift on conversion to common stock. Conversion will occur immediately prior to the issuance of Series E Preferred stock and closing of the Qualified Merger (listing on OTCBB)
Warrants: Smith will issue Tanfield 5,050,017 warrants at an exercise price equal to post-money valuation at the closing of the Series E Preferred stock and 5,050,017 at an exercise price equal to the post-money valuation at the closing of the post-merger financing or underwritten public offering. . The warrants will be exercisable within 6 months of issuance and carry a term of 2 years.
As a consequence of this agreement and as a current common stock holder in Smith, Roy Stanley, will receive two trenches totalling 3,997,600 warrants on the same terms. Mr Stanley is assigning the rights to these warrants to Tanfield Group plc for nil consideration for the benefit of the Group and its shareholders.
In aggregate the total number of warrants to be issued to Tanfield including those assigned to Tanfield are expected to amount to just under 2% of the issued share capital at the time of the OTCBB listing.
Value to Tanfield Group:
It is estimated that post-merger (listing on OTCBB) Tanfield will hold between 4% and 5% of Smith shares, (excluding warrants). The ultimate holding post the public listing on a US National exchange will depend on price at which any money is raised at that point.
There can be no assurance that the OTCBB listing or subsequent listing on a U.S. National Exchange will be achieved and that value will accrue to Tanfield in its investment in Smith.