Investment company Tanfield Group says there are still delays to the legal case it faces to keep control of its £19.1m stake in Washington-based Snorkel.
In an update to investors, North East-based Tanfield said a US trial window would now begin in February 2023, while its UK legal case progresses towards trial in November.
Tanfield said that, despite its board’s best efforts to resolve the delay, there were still “deficiencies” in the documents produced by Snorkel and Xtreme in the US case.
In January, Tanfield announced that it had amended its claim in the UK proceedings to include US law firm Foulston Siefkin as a second defendant in addition to Newcastle law firm, Ward Hadaway.
Before trial, expert accountancy evidence will be prepared to value Snorkel at the time of Tanfield and Xtreme’s staged acquisition deal for 51% of the loss-making business in order to save it.
Tanfield said that, as part of its disclosure obligations, it has provided the defendants with an appraisal report prepared by independent experts for Xtreme which sets out the tangible and intangible assets of Snorkel at the time of the deal – about £36.8m ($45.5m).
Meanwhile Snorkel saw EBITDA losses continue despite an uplift in sales in 2021 following Covid-related disruption. Sales for the fourth quarter of 2021 increased by 69.2% year-on-year to about £33.2 ($41m) and sales for the full year increased by 39.9% to about £125.7m ($155m).
Tanfield drew attention to a further fall in the gross profit margin to around 1.5% for the final quarter of 2021, compared to 6.6% in the final quarter of 2020. It said it was unaware of the reason for the fall and that work was ongoing to investigate the trend.
In a statement issued to shareholders read: “The board believes that a positive outcome to either or both of the US and UK proceedings is a reasonable expectation, and the company will continue to vigorously defend and advance its position in both proceedings, whilst continuing to seek advice.”