Optare raises £7.4m in equity placement and announces planned capacity expansion
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British bus maker Optare plc has raised £7.4 million of investment via a successful equity placement announced yesterday (16 February). CEO Jim Sumner said the funds will allow relocation of the operations of the company's ageing Leeds factory to a new facility (see artists impression, opposite) with the capability to substantially increase capacity, provide working capital for growth and significantly reduce term debt.
Optare said that its order-book now stands at a record £43 million and is continuing to grow following investment in new product and market developments. To support this and future sales growth the company has entered into an exclusivity agreement and is in negotiations on a long-term lease for a new manufacturing site to replace its ageing plant at Leeds.
Geographically close, this potential new site will house a state of the art production facility capable of handling Optare's new generation of single and double deck buses. It also has the capability to double capacity to 1,200 buses as part of a strategy of targeting fleet sales growth. The move to a new facility will also represent the culmination of Optare's site rationalisation programme, with three constrained production facilities being replaced by one highly efficient assembly plant.
Lessons learned in the recent opening of new plants by Ashok Leyland, both in India and the Middle East, will be applied to the layout of the new factory.
Production will transfer from the Leeds site to the new location during the second half of 2011 under the leadership of experienced project manager Rodney Swarbrick.
Optare Supply Chain Director Amanda McLaren said: "Significant progress is being made on low cost manufacturing and joint sourcing with our partners Ashok Leyland. This is extremely important at a time of increasing commodity prices and inflation putting pressure on manufacturing costs."
