18.05.2021

Slower start for Snorkel

Snorkel first quarter sales fell 27 percent according to information released by minority shareholder Tanfield which still owns a disputed 49 percent of the equity.

In a public statement it said that it was waiting for the year end audit to be completed before releasing its full year 2020 numbers. In the meantime it has released interim numbers for the first quarter, which may be subject to change. Total sales declined 27 percent to $31.4 million, compared to the first quarter of 2020 - the last pre-pandemic quarter - while the net loss for the period increased from $2.54 million to $3.2 million.

Vertikal Comment

It should be said that Snorkel’s ultimate owner, Don Ahern, has no great interest in any effort to ‘enhance’ the numbers, given that he is currently going through a legal battle with Tanfield for the ownership of the 49 percent stake.

The original agreement that he made with Tanfield when he took over, what was essentially a failed business in 2013, did seem very clear at the time. It said that if the company exceeded certain criteria in terms of profit and cash flow it would pay Tanfield for its remaining shares based on a formula. If not the implication was that he would simply cancel the shares. The logic for this was that unless the underlying business was in better shape that it looked, or the market picked up dramatically, the funds he would be required to invest would more than cancel out the value of the residual holding.

Tanfield naturally disagrees, which has resulted in Ahern taking the legal action - see: Ahern Tanfield dispute goes legal.