Investment company Tanfield looks set to benefit to the tune of £1.5m from the stake it retains in a former subsidiary.
Smith Electric Vehicles, in which Tanfield holds a 5.76% equity stake, has executed a conditional agreement to form an exclusive joint venture with strategic partner and investor, FDG Electric Vehicles Limited, an international company listed on the Hong Kong Stock Exchange.
Under the terms of the move, Smith will gain 20m shares out of a total of 42.5m, representing a 47% holding.
These will all be distributed to its common stakeholders on a pro rata basis.
Based on current valuations, Tanfield believes that, subject to its completion, the move will be worth $2.3m to the company, while retaining its existing 5.76% holding in Smith Electric, currently valued at $10.7m.
The new trading entity, a private Delaware corporation, will offer a combined portfolio of all-electric vehicles and fleet electrification solutions for customers in the United State and its protectorates across a broad range of segments, including delivery and transit.
This portfolio includes the Smith Newton platform configuration and Smith sub systems, the FDG all-electric commercial EV platform, itS lithium-ion batteries and all-electric power-train, as well as infrastructure, energy contracts and financing.
As part of the deal, FDG will invest $15m in cash and $30m in assets, licence for commercial EV and IP.
Smith, meanwhile, will deliver an exclusive licence for the use of its IP in the USA, as well as an exclusive licence for the use of its brand name in the country.
It will also provide an executed OEM Supply Agreement no later than June 30, exclusive sales and distribution rights of electric vehicles in the US and exclusive rights to form a battery rental business there.
The vehicles involved will be Smith branded and the new joint venture will contract exclusively with the company for product development services, vehicle manufacturing, service and support.
Smith will retain its rights outside of the United States for the commercialisation of the Newton and Edison vehicles and Smith sub systems.
The agreement is dependant on a number of conditions being met, including the necessary government approvals and FDG due diligence.
Tanfield said in a statement: “The Tanfield board notes these developments within Smith, which it views as positive. The joint forces of Smith and FDG and the combined investment in EV technology presents significant opportunities in a developing EV market.”
As well as the investment in Smith Electric Vehicles, Tanfield holds 45% of the equity of the aerial work platform business, Snorkel.