04.07.2008

Tanfield secures additional funding

Tanfield’s Snorkel International subsidiary has agreed a five year revolving credit facility of up to $35 million with JP Morgan Chase Bank secured over Snorkel's assets.

The facility will bear an interest rate of the greater of prime rate of interest announced by Chase and the Federal Fund's effective rate plus 0.5 per cent., subject to a cap of 5.25 per cent and a floor of 3.67 per cent..

Tanfield shares plunged to a low of under five pence a share this week following a trading statement that admitted lower growth numbers that originally forecast. Tanfield has reacted by announcing a period of consolidation and slower growth.

Vertikal Comment

Tanfield has done a remarkable job in building its aerial lift business to it s current levels, in such a s short space of time, however its forecasts barely allowed for any glitches, the current slow down, caused more by a failure in confidence than a slow down in underlying demand, was to some extent predictable, although its timing less so.

Tanfield’s error, if there is one, is allowing investors to believe that it could maintain its initial growth levels regardless of what might happen in the wider world. It is now being punished with many institutional investors taking the apparent view that the everything the company has said is pure smoke and mirrors.

A share price of 5p is utterly ridiculous and reflects the stupidity of the ‘market’ at times like this. It is hard to imagine that anyone holding Tanfield stock would sell at this rate, but they most certainly have.

The 5p level should encourage a suitor to step in with a takeover bid, however we all know that as soon as anyone did the price would skyrocket, making it hard to understand why it has fallen quite so much.

The next two months could be interesting.