The UK-based bus manufacturer Optare Plc’s shareholders have given approval for Hinduja Group-owned Ashok Leyland and associates to increase their stake to 75.1 per cent in it.
The company convinced the shareholders by saying, “If the placings do not happen, Optare does not have any alternative to finance ongoing operations and thus will not be able to continue to trade”.
“A meeting of shareholders was held at Optare’s bus assembly plant. About 99.9 per cent of the shareholders who voted backed the deal and, simultaneously, integrate Optare and its advanced product range into Ashok Leyland’s Global Bus Strategy. Turnout was 70 per cent. This is a real vote of confidence in both Optare and Ashok,” Jim Sumner, Optare’s CEO said in a statement.
He added though the plan has involved diluting current shareholders, it is recognised that this deal is in the best interests of the long-term business and secures its future within one of the world’s top five bus makers.
Ashok Leyland will have 25.34 per cent, and associated companies, Ashley Holdings 23.22 per cent and Ashley Investments 26.54 per cent.
In December last week, Falkirk bus manufacturer Alexander Dennis threatened to gatecrash Ashok Leyland’s plan to take control of Optare. However, within a day it made a statement saying the company was dropping the potential takeover bid. Following which, Optare called for a shareholders’ meeting to get their nod.
The placing was intended to enable the company to re-bank through banking relationships with Ashok companies, said Optare, which had an order book of £59 million as on December 20, 2011, as compared to £24 million at the end of June 2010.
The Board wanted to take the requirement for increased banking facilities to a level commensurate with the growing order book and export opportunities and it has been in discussions with Ashok Leyland regarding re-banking options. The Board previously entered into a facility agreement with the parent company of Ashok Leyland to provide Optare with up to £3 million working capital.
In a note to the shareholders, Optare said, “If the placing does not proceed, the company does not have, at this stage, alternative means to finance its ongoing operations and thus will not be able to continue to trade.”
The note also said, following completion of the placing, Ashok Leyland intended to grow Optare’s business, in part by using it’s expertise in launching cost-effective bus models suitable for application in various countries and integrating the technologies it uses with the design and production capabilities of Optare.
As a first step, Leyland will carry out a strategic review of Optare’s business and operations, focusing in particular on how Leyland might further assist Optare to improve productivity within its business, through the cost-effective sourcing of materials on a global basis and through the launch of new models.
