CHERRY picker manufacturer the Tanfield Group received a £3.5m cash injection yesterday as part of the deal which saw it sell its electric van division to its US partner earlier this year.

The cash is likely to be used as working capital for its aerial work platform division which saw a 170 per cent rise in orders over the first half of the year, but was held back by bottlenecks in the supply chain.

The firm, based in Washington, Wearside, sold its Smith Electric Vehicles division to partner Smith Electric Vehicles US (Sevus) on January 1 in a £9.74m deal, with the cash to be paid in installments.

As part of the agreement Sevus was to pay in full what it owed if it undertook a major fundraising drive.

Sevus has just completed a private share placing of $30m (£18.75m) after its started a drive to raise money for future projects in August.

Yesterday Tanfield also retained a further £1.25m it was owed in shares in Sevus meaning it has a shareholding of 27 per cent in a business valued at £75m.

January's deal came after Tanfield rejected a £37m offer, made in March last year, from Sevus to buy the Smith Electric Vehicles business outright.

In a statement to the London Stock Exchange yesterday Tanfield, which employs 230 in the North-East, said: "The Board of Tanfield is pleased to announce that its US associated company, Smith Electric Vehicles Corp has filed a Form D with the U.S. Securities and Exchange Commission announcing a private placing of $30 million of new convertible notes and warrants.

"The funds received by Tanfield will be used to finance the ongoing development of the company's Snorkel Powered Access business."

In interim results released in September for the six months to June, Tanfield said the value of orders on its books had soared to £20.9m compared to £7.7m in December.

However chief executive Darren Kell added that the company was now being held back by the supply chain, which had downscaled in the recession, struggling to scale up again fast enough to meet demand.

Mr Kell said: "Global demand for aerial work platforms is returning, driven by major fleet operators replacing ageing equipment.

"However, this has created bottlenecks as the supply chain struggles to restore the capacity it lost during the protracted downturn."