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Bus maker Optare is raising £7.4m at 2p a share in order to finance the move to new premises in Leeds and reduce borrowings.
The new shares will account for nearly 50% of the enlarged share capital.
A major shareholder has provided Optare with short-term facilities. The first facility is for up to £1.5m and it lasts until 13 March 2011. The latest facility is for up to £750,000 and it matures on 19 February 2011 – subsequently extended to 20 March or when the proceeds of the placing are received. Both facilities have an annual interest rate of 8 percentage points above base rate.
Optare has bank debt and overdrafts of £6.1m with a further £700,000 of overdraft available – some of it for a limited time. The £2.25m of loan facilities are already drawn down.
The company should get the £7m net raised from the placing at the beginning of March after shareholders have agreed to the share issue. More cash could come from the sale of a property in Rotherham.
Optare says that the current Leeds factory is old and the lease has less than one year to go. The new facility will enable capacity to be increased. The order book is worth £43m and this should increase in the first quarter of 2010.
At 2.38p a share, Optare is currently valued at £9.08m.
Download the February edition of AIM Journal at http://www.hubinvest.com/AIMPDFFebruary2011_17.pdf
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