Indian giant takes 75% Optare stake
ASHOK Leyland has increased its stake in Optare to more than 75% as the bus manufacturer celebrates an £18m order.
Optare, which has its main assembly plant in Sherburn in Elmet, has raised £4m from the deal which also gives it access to new banking facilities through Ashok Leyland, part of the Hinduja Group and India’s second largest commercial vehicle manufacturer.
However, the deal announced on Tuesday revealed the shares were issued to Ashok Leyland at 0.27p, compared to Monday’s closing price of 1.37p.
Optare said it had not been able to secure the facilities it needed through discussions with its bank but had agreed a deal with Ashok Leyland giving it access to a £12m credit line. The deal was dependent on Ashok Leyland taking its stake beyond 75%.
Vinod Dasari, Ashok Leyland’s managing director, said: “We see this as an important element in realizing our vision of being among the top five bus manufacturers globally.
“Through leveraging the synergies of the two companies, we are confident that going forward we will be able to accelerate technology sharing, develop future-ready products and substantially and quickly increase our global footprint.”
The Optare share price fell sharply yesterday as news of the deal emerged, closing at 0.6p. Ashok Leyland had initially taken a 26% stake in Optare in July 2010.
Optare chief executive Jim Sumner said: “This is great news for Optare’s customers, employees and suppliers and secures stability and the long-term future of the business. The re-banking represents a defining moment in the company’s three-year turnaround plan which commenced in June 2009.
“In addition, our recent move to a new factory in Sherburn gives us the capacity and modern assembly facilities necessary to fully capitalise on the additional sales and joint product development opportunities which our deeper partnership with Ashok Leyland will undoubtedly deliver.”
As the Ashok Leyland deal emerged, Optare also announced it had signed a deal worth up to £18m which will seee it supply vehicles to the City of Cape Town, in South Africa.
Optare will supply components to its South African partner Busmark 2000 which will produce the buses at a new plant in Cape Town.
