10.09.2013
Snorkel sale update
Tanfield has borrowed £500,000 from two unnamed directors in order to ensure that it has enough cash to continue trading while its prospective buyer completes its due diligence.
The loan is secured against the company’s assets and pays 9.5 percent interest. The company says that the potential buyer, who has an unspecified period of exclusivity, “is making significant progress with its due diligence and the completion of a suitable contract.”
The company goes on to say: “As previously announced, the company is currently being managed to conserve cash through the sales process. In order to bolster the company's cash position and to provide working capital headroom through the period the Company has secured a debt facility of £500,000 from two of its Directors. The loan is secured and has a fixed interest rate of 9.5 percent and is repayable on the earlier of completion of the sale of the powered access division or 20 December 2013.”
“The Company may need to raise further funds from exchange of contract to completion. The board will seek alternatives sources of funds, however, these Directors have indicated they would be prepared to extend further funds if necessary.”
Vertikal Comment
It has been over a month since Tanfield announced that it had given a single buyer a 'short' period of exclusivity to buy Snorkel.
With cash reserves dwindling it was fairly certain that it was going to have to do something, even though it has scaled back its activities in order to conserve capital. The directors loan was certainly the fastest way to pump money into the business, and as a secured loan with a decent interest rate it will also be a good deal for them.
If the current buyer decides against the deal, then it will have to look at something a great deal more substantial.
dunwithit
Unbelievable!The same inept managers that have ruined Snorkel continue to reap financial rewards as it goes down.While the well run Companies like JLD,Terex and Skyjack are well in the black,Snorkel has failed in all aspects even as the world economy improves.
There has needed to be a regime change at Snorkel long before now!
Hoogi
What is the loan secured against? The announcement doesn't say. What assets might fall into the lap of the lenders if the sale falls through? And does this arrangement represent a possible conflict of interests, with the two directors in a position to personally gain assets via a collapse? I am inclined to view today's announcement as positive news - but with a cynical percentage of doubt!