06.02.2009

Tanfield to spin off Electric Vehicles in US

Tanfield, owner of UpRight, Snorkel and SEV Electric Vehicles is to spin off its Electric Vehicle business in the USA.

The company is working with private investors to establish Smith Electric Vehicles US Corporation (SEV US) which will be a private company in which it will own a 49 percent stake.

Tanfield will then grant a licence for the North American intellectual property rights relating to the production of its Smith product range to SEV US, which will pay a per-vehicle royalty fee to Tanfield based on the sales price of each commercial vehicle with an initial advance of £1m.

Tanfield will retain responsibility for design and intellectual property development. Furthermore, SEV US will draw on Tanfield for various services and support functions, for a fee to be agreed.

The Heads of Terms anticipates a total fund raising of $10 million, which will be achieved through the issue of new shares in SEV US to investors and through the availability of State funding. The transaction is conditional on funding and a number of agreements.

Tanfield says that SEV US has received firm expressions from two States, of funding support for a production facility. It will announce a final location for this facility shortly.

SEV US intends to commence production of the Smith Newton truck for sale in North America during 2009, with further zero emission product lines to follow in the truck, van and light van sectors. The Smith Newton is based on the Avia truck chassis and is available in configurations from 7,500kg to 12,000kg gross vehicle weight, or 15,500lbs to 25,000lbs, which equate to US Class 5 and 6 medium duty trucks.

Tanfield says that it expects SEV US will produce a moderate number of Newton trucks in 2009, for sale as seed vehicles into targeted major fleet operators.

The Board of SEV US will comprise five executive members, including two Tanfield board members - Geoff Allison, managing director of the Zero Emission Vehicles Division and John Bridge, non-executive director.

The chief executive will be Bryan Hansel, previously CEO of evo Medical Solutions, a medical devices manufacturer based in Des Moines, Iowa.

The remaining two board members will be Bruce Shalett, managing partner of Lincoln Woods Capital Management and one additional member to be named by SEV US over the coming weeks.