The long term future of British bus maker Optare plc has been secured thanks to a refinancing agreement announced today. The deal involves Ashok Leyland increasing its holding in Optare to 75.1% allowing Optare to become fully integrated in Ashok’s ambitious global bus strategy which seeks to maintain and improve on its top five place amongst the world’s bus makers. Ashok Leyland Ltd is the flagship company in India of the Hinduja Group.

The refinancing is being achieved by Ashok Leyland providing a guarantee to support Optare’s re-banking which will provide a substantially improved working capital facility for the business. At the same time, Ashok Leyland will increase its stake to 75.1 per cent of the Company’s share capital through a placing of shares raising new equity.

Ashok Leyland’s global bus strategy encompasses the role of Optare in enhancing Ashok Leyland’s product portfolio and global footprint. The existing contractual and statutory employment rights and pension rights of all Optare employees will be safeguarded.

CEO Jim Sumner said: “This is great news for Optare’s customers, employees and suppliers by securing stability and the long-term future of the business. The re-banking of Optare represents a critical milestone in the turnaround of the business and allows us to now complete the final phase of the three year 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 capitalise on the additional sales our deeper partnership with Ashok Leyland will undoubtedly deliver”, he also said.

John Fickling, Chairman said: “Given the global economic challenges we all face, this is a game changing deal for Optare. It ensures that we can grow and prosper in an ever changing and demanding market place”.

Vinod Dasari, Managing Director, Ashok Leyland observed: “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 increase our global footprint to fast-track our growth in volumes”.

Dheeraj Hinduja, Chairman of Ashok Leyland said, “We are confident that, together with Optare, we can surge ahead leveraging historic British manufacturing excellence and taking advantage of the large opportunities for growth and development we see based on synergy and integration with the Ashok Leyland bus business”.

About the Hinduja Group:
Hinduja Group is an investment and banking group with a diversified global portfolio of holdings across the manufacturing services and banking sectors. The Group, founded by Shri P.D. Hinduja in 1914 has activities across three core areas: Investment Banking, International Trading and Global Investments. It also supports charitable and philanthropic activities across the world through the Hinduja Foundation. As part of its Global investments, the Group owns businesses in Automotive, Information Technology, Media, Entertainment & Communications, Banking & Finance, Infrastructure Project Development, Chemicals & Agri business, Energy, Real Estate, Trading and Healthcare. www.hindujagroup.com.

About Ashok Leyland:
Ashok Leyland is the flagship of the Hinduja Group and a leading Indian commercial vehicle manufacturing company based in Chennai selling approximately 94,000 vehicles and about 17,000 engines annually and is the second largest commercial vehicle company in India in the medium and heavy commercial vehicle segment, with a market share of about 25.7 per cent. in 2010 -11. Ashok is a market leader in the Indian bus market selling over 23,000 buses annually. The sales turnover of Ashok in 2010-11 was US $ 2.5 billion. Ashok has seven plants in India, one in the Czech Republic and one in the Middle East with a current global capacity of over 150,000 buses and trucks. In 2006 Ashok became the first automobile company in India to achieve the internationally renowned TS16949 certification.

About Optare:
Optare is Britain’s leading maker of advanced low-floor integral buses and employs around 500 people across the group, principally at its new assembly facility in Sherburn in Elmet, Yorkshire. The company produces a wide range of fuel efficient buses of its own integral design. In addition Optare has pioneered its ‘EcoDrive’ programme across all of its products which deliver a wide range of low carbon power options, including hybrid, full electric and dual fuel models.