RNS Number : 7865E
Tanfield Group PLC
22 October 2018

Tanfield Group Plc

("Tanfield" or the "Company")


Snorkel Investment Update



The Board of Tanfield (the "Board") provides the following update to the market relating to its investment in Snorkel International Holdings LLC ("Snorkel"), the aerial work platform business.


Investment Update


The Board of Tanfield has recently become aware that on 9 October 2018 KHL Access International published an interview with Don Ahern, owner of Ahern Rentals and Xtreme Manufacturing, and Matthew Elvin, CEO of Snorkel and Xtreme Manufacturing. In the article, opinions are expressed in relation to past, present and future market conditions as well as comments surrounding strategic decisions that have been made by Don Ahern which the Board believe could have a positive impact on the future trading of Snorkel. The full interview can be found on the KHL website at the following address https://www.khl.com/access-international/interview-don-ahern/135227.article.


In the interview, Don Ahern was asked if Ahern's majority acquisition of Snorkel in 2013 has become everything he expected it to be.  "Almost", he replied, "We are very pleased with it. We have taken a company that was distressed and was barely operating and was probably within a very short time of not operating. You could call it ground zero, and now we are annualising around $300 million."  While the Board take great comfort that the Don Ahern, owner of Xtreme Manufacturing, is very pleased with the progress of Snorkel, and that it has almost become everything he expected it to be, the statement "and now we are annualising around $300 million" differs to an opinion recently expressed by the Board.


As reported in the Snorkel Investment Update on 6 September 2018, the Board commented that it believes sales in 2018 could be in excess of $200m if the trend of sales growth continues for the second half of 2018.  Snorkel have stated to the Board that the statement "now we are annualising around $300 million" is not accurate. The Board have not been made aware of the accurate value and so at present, the Board remain of the opinion that if the trend of sales growth continues, it believes sales could be in excess of $200m in 2018 (2017: $166m), which would be an increase of at least 20%.


The Board expects to be able to update the market further on the recent performance of Snorkel, specifically the third quarter of 2018, by the end of November 2018 when the current sales levels of Snorkel can be confirmed.



For further information:


Tanfield Group Plc

Daryn Robinson                                                                             020 7220 1666


WH Ireland Limited - Nominated Advisor / Broker

James Joyce / Chris Viggor                                                          020 7220 1666


The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.





·     Tanfield is a 49% shareholder in the equity of Snorkel following the joint venture between Tanfield Group Plc and Xtreme Manufacturing LLC ("Xtreme"), a Company owned by Don Ahern of Ahern Rentals Inc ("Ahern"), relating to Snorkel, in October 2013.

·     As reported in the Interim Results on 28 September 2018, the Board impaired the Snorkel investment value from £36.3m to £19.1m ($25.3m), which represents approximately 12p per share.

·     In June 2018, Snorkel indicated to the Board that it expects Xtreme will cause SKL Holdings to exercise its call option at the earliest opportunity, in October 2018.  Since June 2018, the Board has received no further indication from either Snorkel or Xtreme as to the intent of SKL Holdings.

·     The Board reported in the 2017 Annual Report that entering into the next phase would bring with it a level of uncertainty.  In the event that the call option is exercised in October 2018, the Board anticipates that there will most likely be a period of negotiation - potentially protracted - prior to any financial realisation and the Board will need to assess the Company's position and, if necessary, take appropriate advice and initiate an audit at or prior to that time.

·     Based on the information currently available to the Board, it is likely that the trailing 12 month EBITDA at October 2018 will result in the price of the call option being at best a modest amount, possibly nil, but this will need to be validated at the time and consequently the Board has restricted its current valuation of the Company's interest in Snorkel to the priority amount and preferred return values only.

·     The Q2 results show a material restatement of the Snorkel balance sheet and a significant increase in the value of non-current liabilities from $27m at 31 March 2018 to $79m at 30 June 2018.  The Board has requested information on these changes but currently has not received a response. 

·     As reported in the Snorkel Investment Update on 20 September 2018, Charles Brooks, the former Chief Financial Officer of Tanfield Group Plc, who had significant input into the key documents pertaining to the joint venture between Tanfield and Xtreme and whose employment transferred following the joint venture to become the Chief Financial Officer of both Snorkel and Xtreme, has made assertions that the preferred interest position is only applicable until 30 September 2018, after which date the value will be nil.  The Board does not agree with the assertions made by Mr Brooks and is of the belief that the intent of the agreement requires the payment of the preferred interest position prior to or in conjunction with Xtreme seeking to exercise the call option to acquire Tanfield's equity in Snorkel. 

·     Whilst there is no formal dispute with Xtreme currently, the Board has inferred from its correspondence with Mr Brooks that this may occur in due course. Should Xtreme attempt to exercise its call option and dispute that the adjusted preferred interest position is payable, the Board will vigorously defend its position that the preferred interest is payable.




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