AN electric van manufacturer last night appeared to have addressed a sharp fall in its cash reserves after half the shares it issued were bought.

Earlier this month, the Tanfield Group said it would release 20 million shares at 10p each, a discount of 31 per cent on their closing price ahead of the announcement, which existing shareholders could buy.

The group’s net cash had declined by £3.2m during the first six months of the year to £2.2m and the share offer was to provide it with extra resources as it awaits completion of a deal with its US partner.

Last night it emerged that more than ten million shares had been snapped up by existing shareholders in a take-up of approximately 50.42 per cent.

Three directors of the company, Darren Kell, Roy Stanley and Jon Pither, had agreed to underwrite the share offer and subscribe to more than 90 per cent of the new shares between them if they were not bought by other shareholders.

They will now take up the remaining 49.58 per cent of shares, upon shareholder approval at the company’s general meeting tomorrow.

The company would not comment on the shares issue last night, but industry sources indicated that it was likely to be pleased with the take-up result.

The Wearside firm is to receive a significant injection of working capital when an expected merger of its Smith Electric Vehicles division with US partner, Smith Electric Vehicles US (Sevus), in which it owns a 49 per cent stake, goes through.