Optare’s £7.4m aim through share issue

The group said it is placing 370 million new shares at 2p each with institutional and other investors to fund the relocation of its Manston Lane site.

Optare, headed by chief executive Jim Sumner, added some of the funds will be used for working capital and to reduce its debt. The company needs shareholder approval for the placing.

In January, the group outlined plans to move its Leeds site to a “new local facility” because it does not expect the current site’s lease to be extended beyond the end of 2011.

“This new facility will provide increased capacity and improved productivity due to a more optimal plant layout,” said the group at the time.

Optare declined to comment on where it plans to move to.

Last week, the AIM-listed group revealed a new contract to supply 68 single and double decker buses to an unnamed major UK operator. This £7.6m contract boosted the group’s order book to more than £43m.

It also announced a £750,000 loan facility agreed with a major shareholder to support its working capital needs. This is set at eight per cent above the bank base rate.

In January, Optare said it was looking forward to increasing its order book and output in 2011 after suffering December’s heavy snowfall.

“The board looks forward to 2011 with confidence given the benefits of an improving order book, recent investments in product development and a strongly supportive long-term partner in Ashok Leyland,” the company said.