Smith Electric Vehicles US, which is partly owned by the Washington-based Tanfield Group, has got the go-ahead to restructure the capital of the company.
The board intends to convert all debt into common stock prior to listing on the OTCBB while simultaneously raising up to $30m.
It is then proposed that Smith seeks a full listing on a US National Exchange.
The move has been enabled through an agreement with Tanfield, which conditionally binds the North East firm to sign certain consents before the proposals can go ahead.
In an announcement posted on the London Stock Exchange, Tanfield said: “The Smith board have made significant progress in its plan and succeeded in getting a major investment commitment from an important strategic partner, Sinopoly, as announced on May 12, 2014.
“The Smith board continue to work hard to achieve their goal.
“The Tanfield board has evaluated the balance of risk and reward associated with the Smith restructuring plan.
“On balance it remains positive that supporting this plan represents the best possible outcome for all stakeholders of Smith, including Tanfield.
“The Tanfield board considers that in entering this agreement it has sought to fulfil its obligation to its shareholders in seeking to optimise the value on its investment in Smith.”
It is estimated that after the initial listing on OTCBB, Tanfield will hold between 4% and 5% of Smith shares.
The ultimate holding after the public listing on a US National exchange will depend on price at which any money is raised at that point.
Tanfield added: “There can be no assurance that the OTCBB listing or subsequent listing on a US National Exchange will be achieved and that value will accrue to Tanfield in its investment in Smith.”