Tanfield Group says it may sell some of its holding in Smith Electric Vehicles Corp, if the US-based electric vehicles manufacturer goes ahead with its IPO on the Nasdaq Global Market. Tanfield shares rose by nearly one-third on the news.
Smith has filed a Form S-1 registration statement with the SEC. A total of $125 million is targeted by Smith but no share price has been set and there is no date for the flotation. UBS Investment Bank and BofA Merrill Lynch are underwriting the offering.
Some of the cash will be used to redeem Series A Debentures which have an annual interest rate of 10%.The rest will be used for working capital and capital expenditure. Smith is opening a new $5 million factory in the South Bronx and is receiving $1.7 million in tax breaks from New York city. Smith will need to raise more cash next year.
Smith lost $21.3 million on revenues of $37.6 million in the six months to June 2011. The cash outflow was $24.2 million. Vehicle sales, including forklift sales, were more than three times the levels in the first half of 2010. However, Smith is still making a gross loss on vehicle sales even before any overheads are taken into account.
12-month high/low 16.25p/53.75p
Market cap: £47 million